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FINANCIAL TIMES 


Mitterrand’s 
historic 
visit. Page 3 


No. 30,242 _ 


EUROPE’S BUSINESS NEWSPAPER 

Tuesday May 26 1987 




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as. .zjt. 

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S. African Noranda 
prisoners to float 
on hunger 15 % of 


ans fresh 
on tariffs 


UU ututgci 1370 UJL • A "W 

strike subsidiary against Japan 


More than 100 detainees h e l d «wnhw 
South Africa's state of emergency 
have gone on a forngpi- strike, say- 
ing the government planned to 
brainwash them in ‘reeducation’ 
camps. 

.. 17 ™* prisoners demanded the 
prison authorities stopped chaining 
them or o sing leg irons when tak- 
ing them to hospitals. Page 3 

Reporters expelled 

Six Western journalists were ex- 
pelled from Romania before the 
gtart of Soviet leader Mikhail Gorb- 
achevs three-day visit to the coun- 
try. 

FanfanI trip 

jtaHan caretaker Prime Minister, 
Amintore Fanfani, left for O tta wa 
ppd Washington in a series of visits 
to prepare ’far next month's eco- 
nomic summit to be held in Venice. 

Afghan pardon 

Afghanistan's Soviet-backed Gov- 
ernment announced a limited am- 
nesty for prisoners to mark an Is- 
lamic Festival AO prisoners with 
one year or less of their prison 
terms left to serve will be pardoned 
and freed. 

Irish vote 

He Irish Republic votes today in a 
referendum that will decide the 
co un tr y ’s future status in the Euro- 
pean' Community. Page*; Feature 

ftp?*':', 

EC Decision 

Europe a n Community foreign min- 
isters agreed there was no scape for 
any new Middle East peace initia- 
tives ass fesujtuf an impale in Is- 
rael over 'the issue of an intema- 
tional peace conference. 


NORANDA, fTwimHiwn resources 1 
group, is planning to go ahead with 
the flotation nest month of its for- 
est products subsidiary. It will be 
the largest company ever floated in 
Canada, with a likely market value 
of more than CS2bn ($1.48bn). 
Page 24 

EUROPEAN Monetary System: The 
Belgian franc was slightly firmer 
overall, despite a cut in discount 
rateto Vk per cent from. 8 per cent 
It remained one of the weaker 
members but was well fnride its 
divergence limit The Italian lira 
showed little overall change al- 
though it was still trading at a re- 
cord low against the D-Mark. Trad- 
ing was a little subdued ahead of 
the long weekend in the UK and US 
and dealers were watching the dol- 
lar’s performance against the D- 
Mark before trying to establish any 
trend. 


BY QUENTIN PEEL IN BRUSSELS 


OR» I" 

2-2SX ^ H 

...II 


ri LMt 

fib 


=TOs- 

Un* |‘ 
PoaHonMv22 ' 
ECUMty 


Fiji amnesty 

' RJfs Governor-General jpantadnn 
amnesty to tire unay leader and. 
troops who staged the mOftairycoup 
earlier this month. Meanwhile, sup- 
porters of the ousted government 
prepared for a protest strike. Page 5 

Barbie hearing 

Klaus Barbie, the former Gestapo 
leader, may be brought back before 
the French court today where he is 
st and ing trial for crimes against hu- 
manity. He has boycotted proceed- 
ings for Ike post two weeks. 

Moscow Jamming 

The US embassy in Moscow said 
the Soviet Union had stopped jam- 
ming Voice of America radio broad- 
casts into the country. 

UK election 

Britain's Conservative Party leader, 
Mrs Thatcher, rejected suggestions 
that the Tories bad lost the initia- 
tive in the general election cam- 
paign. Page 12; Campaign reports, 
ftgesUandll 

Prisoner elected 

A black anti-apartheid activist, in 
i»Q awaiting trial on charges of 
tnewm. has been elected general 
secretary of South Africa's second 
lugart trade uiuon. 

Mitterrand’s quest 

French ftesktent Francois Mitten 
tand arrived in Canada on a five 
day Visit seen as an attempt to open 
a **w chapter in relations between 
the ia&toantries. It is the first visit 
hy* Reach president since 1967. 

Spy suspects 

Two men suspected of spying ftff 
the Soviet Union and East Ger- 
many were being questioned by 
West German authorities. 

Iceberg on tour . 

Greenland has shipped a giant tae- 
b«g to Japan where it will be used 
to a display about the country. Al- 
ready New York bora have asked 
about the possibility of imputing 
toe pollution-free ice to serve in 
cocktails, ftge 3 


77ie chart shows the two constraint* 
on European Monetary System ex~ 
.ciumge rates. The upper grid, based 
on the weakest currency in die sys- 
tem, defines the cross rates from 
. which no currency (except die UmJ 
may nunc more than 214 per cent j 
Hi* lower chart gives each wren- 1 
. cyk divergence from its Ventral*. 
; rate’ against the European Curren- 
cy Unit (ECU), itself a basket of Eu- 
ropean currencies. ■ 

WAUL STREET and London mar- 
kets were dosed for holidays, which 
put a dampener on trading in many 
European bourses. But Paris, Mar 
drid and wumag ad gains. I 

World stock markets, Page 38 

TOKYO*. Strong morning gains ran 
intolight selling, but the Nikke i av- 
erage still finished 50.05 higher at 
24,582.77, Page 38 

AEROSPATIALE, French state- 
owned aircraft and missile manu- 
facturer, aw its profits drop sharp- 
ly last year under the pressure of 
stagnant sales and a dec l i n in g dol- 
lar. Page 28 

ASEA, Swedish electrical engineer- j 
tag group, reported a 29 per cent j 
drop in profits (after financ i al i 
items) to SKr 557m($88.4m) for the j 
first quarter, tart said full-year 
earning s, after financial items were ' 
expected to reach about the same 1 
level as 2988's SKr JL53bn. Page 28 

GE NERAL MOTORS, world’s larg- 
est industrial company, has ap- 
pointed a new president in a major 
reshuffling i if management de- 
signed to provide continuity in the 
company's affairs well into the 
1990s. Page 28 

LATINA, Italian insurance group 
controlled by Carlo de Beaedetti’s 

Cofide bolding company, is poised 
to acquire effective control of Nordi- 
talia, another Italian insurer which 
last year had about LZOObn ($l55m) 
of premium income. Page 28 

NIPPON TELEGRAPH and Tele- 
phone Corp (NTT) scored a 13JZ per 
cent gain in pre-tax profits to 
Y357.96hn (S2fibn)ln fiscal 1988 to 
last March. Page 28 

JOHN LEWIS Partnership, UK de- 
partment store and supermarket 
group, raised annual pre-tax profita 
28 per cent to £ 155 . 5m (S177.2m)- 
Page 15 

EGYPT reached agreement with its 
creditors on a plan to resch e d u l e its 
debt repayments. 


CONTENTS 


SENIOR EUROPEAN Community 
trade officials yesterday agreed on 
new measures to hold down the so- 
aring EC trade deficit with Japan - 
Tunning ■ at an nnnpql 8211m — 
opening the way for substantial ta- 
riff increases on a range of popular 
electronic equipment. 

The nffiriah; approved a plan to 
refuse to “rebind” the existing ta- 
riffs an six key products - compact 
disc players, amplifiers, electronic 
organs, video recorder components, 
digital audio tape (Dat) recorders 
and microwave ovens - within the 
General Agreement on Tariffs and 
Trade (Gatt), unless Japan offers 
alternative measures to open up its 
own market 

At the same time they agreed on 
emergency action to impose puni- 
tive tariffs on three other products 
- colour tetoririona, desk-top com* 
paters, and power tools - 2 there is 
any evidence of a diversion of trade 
from file US, where they are now 
subject to 100' per cent duty in- 
creases. 

Both measures woe last night 
set for formal approval by the 12 EC 


foreign ministers, as part of their 
wider campaign to redress the im- 
balance in EC-Japan trade. 

The most important move is the 
refusal to rebind the Gatt tariffs an 
a range of products in order to pres- 
sure Japan into offering trade "com- 
pensation - for the benefits it has 
gained from the entry of Spain and 
Portugal to the Community. 

Bath those countries have begun 
to dismantle their industrial tariffs 
as part of the EC membership pm 
cess, resulting, according to Euro- 
pean Commission officials, in a 
trade gain of some S12bn for Japan. 
Japanese exports to Spain and Por- 
tugal rose by 30 per emit in 1986, 
they say. 

The Community is conducting ne- 
gotiations with Japan, as it has al- 
ready done with the US and other 
major trading partners, on the bal- 
ance of advantages from Spanish 
and Portuguese membership. 

The frontline EC dP w|Mn d is for 
Japanese tariff concessions for 
Spanish and Portuguese exports, 
like tomato paste, sherry, prat and 
feather products. The threat of an 


Once Gatt tariffs are bound they 
can be altered only by negotiation 
b e tw een trading partners. How- 
ever, the EC tariffs have been un- 
bound because of the accession of 
the two new member states last 
year - and the threat is not to re- 
bind them, unless alternative com- 
pensation is pud, and eventually to 
increase them if it is not 
It would be the first time that Ar- 
ticle 24 (6) of the Gatt was used to 
compensate the CTintnwwt union, 
rather third country partners, 
for » rhange in tha fralannp of trade 


Bundesbank warns on 
money supply growth 


BY ANDREW FISHER M FRANKFURT 


WEST GERMANY'S money supply 
shouM not be allowed to go expand- 
ing beyond its target range for too 
long; if the dangers . of renewed in- 
flation are to be avoided, Mr Hel- 
mut Schlesmger, vice president of 
the Bundesbank, hw warned. 

Speaking assigns of .weakening 
Genium growth have been increas- 
ing, he also sought in a weekend 
speech to play down the' actual im- 
pact of monetary policy on stimulat- 
ing the economy, as well as the 
serve for further interest rate cuts. 

With exports slowing down 
through the firmn es s of the D- 
Mark, the main prop of the German 
economy has recently been domes- 
tic demand. Those caQtag for more 
German action to s timulat e growth 
have thus co n c ent rated on mea- 
sures to enliven the home economy 
such as tax and interest rate reduc- 
tions. 

But Mr Schlesmger argued that 
monetary policy could only have a 
limited effect on German growth at 
present The supply of liquidity in 


the economy is adequate, and inter- 
est rates are historically low. The 
profit and income position of com- 
panies, npd priv ate households re- 
mains favourable," he said. . 

therefore,. he added, they would 
react tittle to further interest rate 
cuts. The Bundesbank recently al- 
lowed money market rates to srften 
through lowering the rate on its 
securities repurchase agree m ents. 

But it has so for resisted de- 
mands for farther cuts in its key 
discount and Lombard rates, cur- 
rently at 3 and 5 per cent respec- 
tively, the levels to which they were 
reduced in January. 

However, one of Germany’s lead- 
ing bankas called on the central' 
bank to consider cutting these rates 
farther in an attempt to counter the 
rise of tiie D-Mark. Mr Walter 
Setau. chairman of Commerzbank, 
said thekey rates should not be “ta- 
boo." 

Mr Schlesmger re fe rred in his 
speech to tiie importance of interest 
note BdjiKbttfwfy m currency zn&r* 


kets, noting central bank inter' 

vention had to be limited by the ex- 
tent to which it endangered mone- 
tary stability. 

The interest rate difference be- 
tween the US and Germany was 
now 4 per cent, he commented. “In 
tins way; a counter- 

weight against further revaluation 
expectations has been formed. 1 ' 

Seeking to set out both the short 
and long-term factors affecting 
Bundesbank poEries, Mr Schlesmg- 
er said tiie central bank would prob- 
ably continue to be faced with "a 
difficult balancing act. 1 * 

Having overshot its target by a 
wide mazgta last year, as foreign 
money flooded into D-Mark invest- 
ments, central bank money stock in | 
April was nearly 8 per cent above 
the level of the fourth quarter of 
1988 compared with a target range 
of between 3 and 8 per cent 
Mr Schlesmger, weti known as an 
advocate of maintaining adherence 
to medium-term goals and not be- 
Conttmied on Page 24 


Guinness scandal forces up 
costs of UK takeovers 


BY OUR FINANCIAL STAFF 

PREDATOR companies generally 
are having to pay sig nifi ca ntl y 
higher prices to clinch victory in 
British takeover battles. Ibis is be- 
cause of tbe mare cautious attitude 
by financial circles to bids which 
has followed the Guinness s ca n d al , 
according to a Financial Times sur- 
vey of leading UK fond managers. 

About 12 fund managers denied 
that their own attitudes to bids had 
changed but acknowledged that 
predators were generaBy having to 
pay hi gher " hid premiums" to win 
controL 

Since the start of the year, a 
string of contested bids have ended 
in failure: the £L2bn ($2.01bn) offer 
by BTR, the industrial holding com- 
pany, for PQktagton Brothers, the 
glassmaker; tiie £570m bid by Willi- 
ams Holding for fellow conglomer- 
ate Norcros; the £187m bid by En- 
glish China-Clays for Bryant Hold- 
ings and the £62m offer by industri- 
al group Wardle Storeys for Cham- 
berlain Phipps, the shoe component 

manufacturer. 

- Successful bids included tiie 
eonim Hrnilw Hovis McDougaQ of- 
fer, for fellow food grotty, Avana,' 


and Tesco's £22&m offer, for Hil- 
lards, tiie Yorkshire supe rm arkets 
group, the latter provoking an at- 
tack on tastitotional “selfishness" 
by Mr Peter Hartley, c h air man of 
Hillards. Both bids were widely re- 
garded as being particularly gen- 
erous prices. 

Several fund managers said that 
to win a contested bid now, a com- 
pany would probably have to pay a 
price which fully reflected the most 
optimistic view of the target's pros- 
pects over the next few years, or, 
measured another way, a premium 
of 20 to 30 per cent above what the 
market ffwingM the company was 
worth. 

Although the Guinness affair was 
widely cited as a key element in 
this shift, several managers said 
last summer's successful defence by 
Woohrorth Holdings against the bid 
from Dixons, the high street retail- 
er; eixt had been important 

There was widespread d ismi ssal 
of the theory that PQktagton's suc- 
cessful' defence marked a fond 9 - 
wawfaJ change in institutional atti- 
tudes. “HBdngton won that battle 
entirety on the company's m e rit s," 


said one fund manager. “It is just a 
ram*»iri<»nr«> Hurt it happened at the 
amp timp as the Guinness affair 
was breaking." 

Fond managers generally denied 
GutaneSS bad marie any rfiffw n iy 
to their own behaviour, but some 
might now be more reluctant to ac- 
cept bids because of hostility to- 
wards them from trustees of then- 
funds. 

New rules on the disclosure of 
share dealings introduced by the 
Takeover Panel fast February in 
the wake of the Guinness sca nd al 
appear to have curbed activity dar- 
ing bids by arbitrageurs - dealers 
who buy into a company involved in 
a takeover in the hope of se&ing out 
at a higher price. But the rules do 
not seem to have influenced greatly 
the behaviour of fund managers. 

Under the new rules, sharehol- 
ders owing more than 1 pet cent of 
a company involved in a bid have to 
disclose any sale or purchase of 
shares. Most fund managers in the 
FT survey said they rarely sold 
shares in a target company during 
the bid and the new rules would not 
affect their behaviour. 


Overseas . ... 

Companies 

UK 

Companies 


Arts- Reviews .... 

- World Gukh 
C omm er ci al Law 


.... 3.3.5,* gssS 1 "-'-""--— 

40. IJ OWWO W • “ 

. ZD, « rvjnneie. 48 

10-12, 14-U'MMdcoM-t a 

30 Barobonds.. ....... .... — = 

Eura-optiaus »" »—* S 

Financial Futures ............. 40 

lutL Capital Marin!* ...... - ; 25. 26 

Letters. 23 

V-; » 

. Management. ................. " 

. .Mw end Matters -*■ R 

• Mover Ktofccts.- jj: 

Stack markets- Bourses. — 

—Wadi Street...-. 38,39 

IS -I«doo 

18 Unit Trust* - — ®«35 

.......... 8 Weather 24 



JAPAN TRIES 
TO TAKE 
THE HEAT 
OUT OF ROW 
OVERTRADE 


Mr Yasubiro Natasone begins new 
effort to end hostility to his trade, 
policy, PAge 24 


Sooth Africa: allegations of police 

brutality 3 

UK economy: EMS entry and impact on 

inflation 17 

Editorial -comment: Volcker’s future; 

UK education policy 22 

West/East Germany: new impetus in 

reunification, debate 22 

Ireland: at war over question of 

neutrality 23 

UK election: the possible impact of 
tactical voting 23 


D 8523 A 


key to Nato 
anus accord 


It pays 
to shop 
around for 
duty-free 
goods 


BY ROBERT MAUTHNER, DIPLOMATIC CORRESPONDENT, IN LONDON By William Dawkins In Brussels 


increase in tariff^ at the Communi- 
ty end is intended to reinforce that 
demand, which so far Tokyo has ap- 
parently rejected. 

The other measure is to ensure 
that there is no diversion of Japa- 
nese exports from the US as a re- 
sult of their current trade row over 

semi-conductors. The Community 
will now rmpfwg prohibitive tariffs 
<m foe products involved in that dis- 
pute, within two weeks of the Euro- 
pean Commission producing evi- 
dence of trade diversion, the EC 


NATO defence ministers will make 
another attempt in Brussels today 
and tomorrow to forge a joint Alli- 
ance position on the Soviet Union’s 
latest arms control proposal, amid 
signs of growing impatience in both 
Moscow and Washington with the 
delays caused by European dis- 
agreements. 

Although a final decision is not 
expected to be taken before the 
Nato foreign ministers’ meeting in. 
Reykjavik on June 11, defence min- 
ister are expected to review the sit- 
uation in the light of last week's 
meetings between President Fran- 
cois Mitterrand of Franfce and 
Chancellor Helmut Kohl of West 
Germany. 

With both Mr Mitterrand and 
Mrs Margaret Thatcher, the British 
Prime Minister, now clearly on re- 
cord as favouring at least some 
form of the Soviet "double 2 ero" op- 
tion- under which all intermediate- 
range nuclear forces (INF) would be 
removed from Europe - Bonn's po- 
sition is now more than ever the 
key to a common Nato stand. 

After his talks with French lead- 
ers in Paris, Mr Kohl, whose coali- 
tion Government is sharply divided 
over the Soviet offer, safe the West 
German Cabinet would annnrmrg 
its position an June 4. 

The f!han««11f>r gave a small hint 
of bow a compromise could be 
reached between his own view that 
reductions of battlefield nuclear 
weapons should be included in any. 
INF deal and that of Mr Hans- 



Mr Helmut Kohl 

Dietrich Genscher, his Liberal Par- 
ty Foreign Minister, who strongly 
supports the ‘'double-zero" option. 

Mr Kohl denied that he was pro- 
posing any formal link between bat- 
tlefield weapons and the two other 
categories of medium-range mis- 
siles under discussion, and pro- 
mised that Bonn would adopt a 
"pragmatic" position. 

In the absence of any need to 
take a final decision, Nato defence 
ministers will devote much of their 
time to considering so-called “com- 
pensatory measures” which the Al- 
liance's military commanders deem 
necessary to plug the gaps in Nato's 
defences which would be left in the 
event of an agreement between tiie 
US and the Soviet Union on remov- 
ing medium-range missiles from 
Europe. 


Britain blocks EC 
code on S. Africa 


BY QUENTIN PEEL IN BRUSSELS 


BRITAIN yesterday blocked the 
adoption of a new European Com- 
munity "charter of principles" for 
the future development of South 
Africa, which would include a com- 
mitment to political unity, protec- 
tion of minority groups, and equali- 
ty before the law. 

Sr Geoffrey Howe, the British 
Foreign Secretary, argued strongly 
that the time was not right for such 
an initiative, following tiie conser- 
vative swing in the latest whites-on- 
ly election. 

He was opposed by Mr Hans van 
den Broeck, the Dutch Foreign Min- 
ister, who said that a public state- 
ment of such principles for a post 
apartheid South Africa would be an 
essential part of tbe EC strategy of 


combining sanctions with confi- 
dence-building measures in the 
country. 

The debate on South Africa toft 
the EC foreign ministers once again 
in disarray over their joint action, 
with radically differing versions 
from the participants on what actu- 
ally happened in the debate. 

British officials insisted that Sir 
Geoffrey won strong support from 
other member states for his argu- 
ment that tiie South African Gov- 
ernment would be particularly “un- 
receptive- to any new and public de- 
marche. 

Mr Van den Broek said that he 
was was supported by a large ma- 
jority, with only the UK and Portu- 
gal opposing the move. 


SUMMER holidaymakers should 
compare prices carefully before 
splashing out on duty-free luxuries. 

Otherwise they could end up paying 
too much, a leading European con- 
sumer group warned yesterday. 

They should be wary of stocking 
up too eagerly at duty-free shops in 
Frankfurt, Brussels and London 
Heathrow airports - the most ex- 
pensive in the EC - suggests a sur- 
vey by Beuc, the bureau of Euro- 
pean consumer unions. 

The booklet, meant as a financial 
survival guide for cost-conscious 
tourists, questions the widely held 
assumption that the best bargains 
on tobacco, perfumes and drinks 
are guaranteed to be found at air- 
port duty-free shops. It also exposes 
some startling price differences 
across the £C for non duty-free con- 
sumer goods from personal stereos 
to tennis rackets. 

And when it comes to getting 
hold of local currency to pay for 
such holiday items, Beuc's investi- 
gators have revealed discrepancies 
in exchange rates - often in the 
same city - big enough to wipe out 
any price savings. 

On duty-free items, the survey re- 
ports that a bottle of gin bought at 
Fr ankf urt airport would actually 
cost more than its equivalent in a 
non duty-free store on the streets of 
Madrid or Milan. Anybody holiday- 
ing in Spain would also do well to 
stock up on aftershave. It costs 
nearly 10 per cent less - including 
tax - than it would without duty in 
Heathrow. 

Overall, Athens airport emerges 
as tbe best place for duty-free bar- 
gains. Cigarettes there are 30 per 
cent cheaper and perfumes 50 per 
cent less than in Brussels, the Com- 
munity’s costliest airport for those 
two products. 

Madrid airport, like the non duty- 
free shops in tbe city itself, is the, 
cheapest in the EC for drink. Its al-' 
cohol prices are 30 per cent lower 
than in FYankfurt, which has the 
EC’s most expensive duty-free alco- 
hol, while Amsterdam wins the 
cheap aftershave stakes, beating 
London by 32 per cent / 

Once holidaymakers reach their 
destination, they can often ^nake 
big savings on non duty-free' goods, 
bearing in mind that they, will have 
to pay extra tax on personal im- 
rts worth more than Ecu 350 




Britain emerges as the cheapest in 
the EC for personal stereos, com- 
pact discs and blank video tapes, 
where it is between 39 per cent and 
135 per cent cheaper than Den- 
mark, the costliest member state 
for most consumer goods. 

Continued on Page 24 



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Financial Times Tuesday 


OVERSEAS NEWS 


EC farm chief 
warns on price 
talks deadlock 


BY TIM DICKSON IN BRUSSELS 

EUROPEAN COMMUNITY 
agriculture ministers were 
accused yesterday of “budget- 
ary schizophrenia” as the ten- 
sion started to rise in the 
crucial farm price talks in 
Brussels. 

The reprimand came from Mr 
Frans Audiessen, the Com- 
munity’s Farm Commissi oner, 
who spelt out the increasingly 
grim financial, consequences of 
failure to accept further signifi- 
cant reforms of the Common 
Agricultural Policy. The 
message was also conveyed to 
foreign affairs ministers who 
were also meeting yesterday. 

In a move which will deepen 
anxiety both in the US and 
among many developing 
nations, Mr Andriessen also 
signalled his complete refusal 
to drop the EC's controversial 
proposal for a new tax on 
vegetable oils and fats. 

The latest warning on the 
Community budget came in 
response to a second “compro- 
mise " paper put forward by 
Mr Paul de Keersmaeker, Bel- 
gium's Agriculture Minister and 
currently chairman of the EC 
Farm Council. 

Delivered to ministers on 
Sunday, it followed last week's 
unsuccessful attempt to break 
the prices deadlock and in- 
cluded new, and largely tech- 


nical modifications to the Com- 
mission's original highly restric- 
tive package. 

Among the new suggestions 
is a change in the agri- 
monetazy system of grt 
currencies and monetary com- 
pensatory amounts which would 
imply smaller price reductions 
for West German farmers, and 
new “solutions” for the rice, 
fruit and vegetable and wine 
regimes. The oOs and fats tax 
and the earlier proposal for a 
change in the in ter v e ntion 
system for cereals remain essen- 
tially Intact 

Mr Andriessen's intention 
yesterday was to highlight the 
extra “ cost ” of the new paper. 
This has been pjrt by the Com- 
mission at Ecu 760m for this 
year and Ecu 840m for 1988. 
That means that whereas the 
original Commission proposals 
would have saved an estimated 
Ecu Llbn this year, only 
Ecu 340m will be saved If Mr 
de Keersmaeker’s latest ideas 
are to be adopted. 

The result according to Mr 
Andriessen, would be an EC 
budget deficit for agriculture 
alone of Ecu 4.1151m this year. 
14 These figures,” he adds, “ are 
calculated on the hypothesis of 
a g-Ecu ratio for 1987 of 0J0. 
Such an hypothesis may well 
become over-optimistic.” 


Ministers take tough 
action on extradition 

BY WILLIAM DAWKINS IN BRUSSELS 


EC Justice Ministers yesterday 
agreed a series of measures to 
streamline and toughen extra- 
dition procedures between mem- 
ber states. 

The decisions were welcomed 
in Brussels as potentially easing 
the way for the extradition for 
trial in Belgium of 26 British 
football supporters charged with 
manslaughter at Heysel stadium 
two years ago. 

Yesterday’s accord will allow 
foreigners sentenced in one 
member state to opt to serve 
out their punishment in a prison 
at home. This would allow the 
British football supporters to 
be tried in a Belgian court, and 
-if -given a jail term, returned 
to UK prisons. 

Ministers also agreed to look 


at ways of speeding up and 
Improving the efficiency of the 
exchange of extradition papers 
between member states. The 
idea was proposed by Belgium, 
present President of the Coun- 
cil of Ministers, which was 
angered last month when extra- 
dition proceedings against the 
supporters collapsed in the UK 

In a farther accord, they 
accepted that defendants tried 
and judged in one member state 
cannot be prosecuted and con- 
demned for the same incident 
in another. This is already the 
case in most EC countries’ 
national laws, but Its existence 
at a Community level is 
expected to help different public 
authorities exchange informa- 
tion. 


Gorbachev 
seeks closer 
ties with 
Romania 

By Patrick Cockburn in Bodnrest 
MR Mikhail Gorbachev started 
talks in Bucharest yesterday 
with President Nicola* Geau- 
sescu, the Romanian leader, at 
the start of a three-day visit 
likely to prove the most testing 
undertaken by the Soviet leader 
in Eastern Europe. 

This of thousand of Roman- 
ians lined the streets from the 
airport into Bucharest in a 

heavily-regimented display of 

welcome for the two leaders 
who immediately went into talks 
on economic relations. 

Romania, although a member 
of the Warsaw Pact, has always 
pursued strongly independent 
foreign and economic policies 
which have led to friction with 
Moscow. At the same time. 
President Ceausescu has for 22 
years run the country as a 
highly authoritarian state, in 
increasingly obvious contrast to 
the more democratic socialist 
system advocated by Mr Gorba- 
chev. 

Western diplomats in 
Bucharest said that Mr Gorba- 
chev’s policies had a strong 
appeal for ordinary Romanians, 
whose Irving standards had 
dropped since 1979 as the Gov- 
ernment gives priority to in- 
creasing exports to pay off its 
*5.8bn (£8.5bn) debt. 

“Our commitment is to 
modernisation and to repaying 
our debts ,” said a Romanian 
official yesterday. Nevertheless 
the difficulty faced by Romanian 
industry In finding export mar- 
kets in the West has led to an 
increasing emphasis on trade 
with the Soviet Union. 

Mr Gorbachev is likely to 
stress that Moscow wants 
greater co-operation with 
Romania, as with the economies 
of the other Socialist states, and 
does not wan to sell oil and gas 
in return for sub-standard in- 
dustrial goods. 

Romania is likely to stress 
foreign policy issues on which 
it is now largely in agreement 
with Moscow, but officials are 
nervous of the effects of Mr 
Gorbachev’s .more liberal poli- 
cies. 

Pravda and Izvesta. the two 
leading Soviet newspapers, are 
not on sale in Bucharest in 
common with the press from the 
rest of the Eastern bloc. 

It is doubtful, however, that 
Mr Gorbachev win go out of his 
way during this week's visit to 
criticise the way in which 
Romania is ran or President 
Ceausescu's decision to allow 
living .standards to fall to pay 
-t dHht 


US officials hold Baghdad talks 


BY STEWART FUMING, US EDITOR* IN WASHINGTON 


OFFICIALS from the US De- 
fence and. State Departments, 
investigating the Iraqi, attack 
on a US frigate a week ago, 
held their first day of talks 
with counterparts in 
yesterday, against a back- 
ground of intensifying' con- 
troversy in Washington about 
US policy in the Golf. 

President Ronald Reagan in- 
sisted again, at the weekend, 
that a US presence in the 
Gulf - is ., essential becaui? 
America has vital strategic and 
economic interests in a region, 
which coeuld . became a “ choke- 
point of freedom ” If it were to 
fall into the hands of an 
hostile, power. 

However, both Republican 
and Democratic party leaders 
in Congren here are express- 
ing dismay at tire events 
which led op to the attack on 
the frigate and concern about 
the administration's future 
policies on the Gulf. 

Last week, the Senate voted 
overwhelmingly to oppose im- 


plementation of an agreement 
to put ll. Kuwaiti oil tankers 
under US protection by regis- 
tering them under the Ameri- 
can flag, until the administra- 
tion has compiled a fall report 
on security plans for protection 
of US -and allied forces in the 
area. 

-Mr Said Rajaie Khorassani, 
Iran's ambassador to the united 
Nations, has warned that. If 
Ian “ has every - intention of 
attacking a Kuwaiti tanker, it 
will continue with that policy 
regardless of whose flag it is 
carrying.” Ibis has added to 
Congressional concerns' about 
the next US moves in the Gulf. 

Senator John Glenn, a mem- 
ber of one of three teams' of 
Congressional investigators now 
in the Gulf, has said he fears a 
crisis If a Kuwaiti tanker flying 
an American flag' were attacked 
“Are we wining to go to war 
over that? “ he asked. 

Echoing this concern— and 
the growing conviction that a 
wider involvement of U£ allies 



John .'Lehman: -Call for 
involvement by allies 

is needed— Mr John Lehman; a 
former US Navy Secretary, 
said, “there is another set of 
rules of engagement that will 
be needed if, in fact, we Inter- 


ourfelves between .the 

ns and Kuwaiti tankers. 

I would day, before w«, enter a 
situation that greatly Increases 
the probability of an act of war, 
we have to bring the allies in 
to get a dear understanding of 
who is going to do what, i* M 
act of war takes place." • 

• Mr Saspar "Weinberger, US 
Defence Secretary, has called 
for states in the Golf to allow 
US aircraft to land and take- 
off from airstrips dose to fhe 
area, saying this would be "a 
very desirable addition, 11 as the 
US steps up its forces m the 

- region. 

AP adds from Dubai: An 
Iranian official warned the US 
and the Soviet Union at the 
weekend that an increase in 
their presence in the .Gulf 
region would lead to an 
“explosive situation." 

Hussein Skeikholeslam, a 
Deputy Foreign Minister, re- 
peated at a news conference 
Iranian charges that the Iraqi 
attack on a US . frigate was 
“not a mistake.” 


Haig Slntoman looks at Berlin’s boisterous ‘Little Istanbul’ 

Kreuzberg’s volatile mix on the boil 


THE AUBERGINES, green 
peppers and huge Mediter- 
ranean tomatoes piled high at 
the twice-weekly Turkish mar- 
ket near an underground station 
in Kreuzberg, West Berlin's 
most run-down inner city 
suburb, say much about how the 
district gained its nickname of 
“Little Istanbul.” 

But although Turkish immi- 
grants make up about 10 per 
cent of West Berlin's 2m popu- 
lation, and account for a much 
larger share in run down Kreuz- 
berg, inner-city racian tension 
is just one of the problems 
which led to the spate of week- 
end rioting in the district 
earlier this month. 

For Kreuzberg is more than 
just another run down Inner 
city slum, with the usual social 
and economic problems to boot 
Unlike Brixton or the Bronx 
it is also a magnet for many 
young West Germans who go 
there to escape from what they 
feel is a stifling conformity in 
the Federal Republic. Over the 
years, Kreuzberg has become a 
symbol for individualism in 
what is unquestionably Western 
Europe’s least conformist city. 

Almost every splinter group 
under the sun seems to.be rep- 
resented here, ranging . from . 


way of life and fewer questions 
asked, is also home to West 
Germany's . largest gay com- 
munity. 

Nestling along the Berlin 
wall,. Kreuzberg’s nm-down 
tenements offer the cheap 
accommodation essential for 
poor immigrants and “alterna- 
tives ” alike. Some pay no rent 
at all, squatting in flats tucked 
away In the back courtyards of 
Kreuzberg's traditional five- or 
six-storey tenements where the 
outside world is left further 
behind as. one inner courtyard 
merges into the next 

Uprooting to Berlin offers an 
additional advantage to many 
young West German males as 
the city's political status under 
the allies means they do not 
have to do national service. 

Starting with “anarchism” 
and ending with “Zen" the 
plentiful local- graffltti gives 
some ideas of the range' of 
“ alternative ” tastes on offer: 

Although it is a heady mi*, 
the breadth of Kreuzberg's 
social diversity alone is not 
enough to explain why its resi- 
dents took to the streets in such 
large numbers earlier - *hi« 
month to embark on one of the 
most serious Wave of rioting 
Berlin has ever seen. . For 


_ _ . _ a 

rainbow haired punks : to.JStfics - while, Kreuzberg became. a “.no 
ftom 1968. It is tittle jwpader agp" area • where i even the 
that the area.- with its:-' eager polics^kPDt their ^distance and 


The area appears 
to attract almost 
all splinter groups 
under the sun 


and firemen came under attack. 
1 Some streets still bear the 
scars of burned out care while 
the ruins of a supermarket 
extensively looted before being 
pot to the torch bear witness 
to the heat of feeling: Not sur- 
prisingly, Kreuzberg is not 
expected to feature on the list 
of places visited by the Queen 
when she comes to Berlin 
today. 

The reasons that brought 
Kreuzbergers out on to the 
strets were almost as mixed as 
the residents themselves^ Indeed 
.the area is so Jullerogenlous 
that the locals are probably 
only united In their opposition 
to “ authority ” rather than 
sharing in any great neighbour- 
hood fellow feeling. 

That Kreuzberg is poor, with 
large and growing numbers of 
peojfle living below the poverty 
line, is just a social backdrop. 
Recently a strings of factors 
have come together to raise, she 
local temperature.' ■ 


Top of the list is a strong 
sense that Kreuzberg has been 
overlooked in the festivity's 
prestige projects and general 
be&nf easting hat is now in fall 
swing to commemorate 
Berlin’s 750th anniversary.' 

“ What use is a massive swim- 
ming pool complex ” — the local 
prestige project — “when your 
roof leaks and yon cant afford 
to fix it,” complains one resi- 
dent Attempts by the local 
council to smarten up tire 
facades of houses with a tide of 
paint and not more more have 
just been salt in the wound. I 
Then there is the issoe of 
West Germany's census, which 
has just been completed. . The 
topic is controversial among 
left-wingers all over the coun- 
try, with the environmental 
Green Party railing far a boy- 
cott But feelings run particu- 
larly high in Kreuzberg, .where 
many residents, be they illegal 
immigrants or jurt drop-outs 
would prefer not to- be counted. 

" However, the biggest ' local 
tinder-box at. present Is the 
planned abolition of Berlin's 
rent-control laws, which have 
hitherto kept some rents 
astonishingly low. 

While the rightwingers on 
tiie Berlin Senate want to fill 
\ in-line with the rump at West 
-.Germany, many Kreuzbergers 
_«*e things differently. ... 


FreshWow 
to Israeli 
security 
services 

By Andrew Wh Wey la 

ISRAEL'S troubled security 
services suffered a 

devastating' blow, from ‘ 
Supreme Court decision to 
release an army officer con- 
victed in 1980 by a «*cret 
military court of trowon and 
espionage. 

Id an unprecedented rating 
on Sunday night the Supreme 
Court overturned the main 
charges against LLeutenant Xzat 
Nafsu, a Circassian Muslim, on 
the grounds that evidence 
against had been con- 

cocted by the Shin Bet, the 
internal security service. 

Lieutenant Nafsu, who waa 
serving in southern Lebanon 
at the time of bis arrest, con- 
sistently claimed from jail that 
he had been forced Into making 
a falsa confession. His case 
only came to light recently 
following a legislative change 
— permitting appeals from mili- 
tary courts to the civilian 
Supreme Court. 

The quashing of the convic- 
tion also marks a rebuff for the 
Sh amir Government, which 
manoeuvred unsuccessfully to 
prevent the Nafsu rase becom- 
ing. public, for fear of the pre- 
cedent it might set. 

Many of the 4,000 Palestinian 
prisoners currently serving sen- 
tences in Israeli jjaiJUs on 
security charges have similarly 
been convicted on the basis of 
unchaliengahle evidence, pre- 
sented by the Shin Bet, who 
claim that to question Its basis 
would reveal the agency's 
sources and methods. 


FINANCIAL times 
P fcMUKd by tbe Fbwmcs* Time* 
(Europe) lit- Frankfurt Branca. 
RsrcMOUd by E. Hugo. 
l£jn. and at member* of the Board 
at Director*. F Bartow. JLA-F. 
McOean. GkT-S. Darner. M.C. 
Gorman. D.E.P. Palmer. London. 
Primer: Franfcfiinrr-Socktla- 

IfcncbemMjWbH, Frankfnrt/Mahi. 
Rrtpom&fe editor. R-A. Hvper. 
ftsnkfort/Mafn. OutoUetwraim 54. 
6000 Frankfort am Main I. O The 
Financial Times Ltd. 19*7. 
FINANCIAL TIMES. USPS No. 
190640. puhSdiod dafly «*£* 
Sunday! and holidays. U.S. 
svbacnptian rates $965.00 per annum. 
Second dan postage paid at New 
Ywk. N.Y. and a t addi tional mailing 
offices. POSTMASTER: send addwn 
changes to FINANCIAL TIMES. 14 
■ East 60th Street. New York. N.Y. 
10022 . 


British Airways and 12 European Airlines introduce AirPlus 









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OVERSEAS NEWS 


*v. 






r 

-.A u 
V. I O’ 

. • ..■* Jr 

**■ -* a 

i- s- 


Greeks fo 
vote on 
US military 
bases 


By Andriana (cndannwi In 
AChcm ‘ 

DR ANDREAS PAPANDREOU, 
the Greek Socialist Prime Mini- 
ster, has said he will -seek a 
referendum on the continued 
f presence of the fourUS: military 
bases in Greece beyond 1988, 
when the present agreement on 
'their operation expires. 

The referendum will be held 
upon the completion of negotia- 
tions for a new bases agreement 
with, the America^ side. Dr 
.Papahdreou has said - his 

- Government is waiting for a' 
formal request for the start of 
negotiations from Washington. 

* 'The Prime Minister made his 
' intentions known' during a vote 
-of confidence debate in Parlia- 
ment over the weekend. This 
-Vote was proposed by Dr 
Papandreou himself last week 
in a hid to end the damage to 
'his Government of allegations 
of - financial -misdeeds in -the 
■ public sector. - 

The vote was carried by the 
•Socialists as expected on the 

- strength of their parliamentary 
majority, with 157 votes in 

. favour to 139 against, represent- 
ing both the conservatives and 
the communist opposition, with 
two blank ballots and two 
.abstentions. 


Floods hit 
Poland 

By Christopher BoblnsU 
fai Warsaw 

HEAVY RAIN in south-eastern 
Poland has caused serious flood- 
ing over about 50,000 hectares 
of farm land and disrupted com- 
munications, power supplies 
and industry-. 

* Conditions began to improve 
•over the weekend but plants in 
the south-eastern town of 
Krosno were reported under 
water, while output had to be 
halted in 96 factories in 
RzeszOw province because of 
the flood threat. 

The flooding has- claimed. one 
victim, a trade driver, and 
hundreds- of people have had 
Ho be evacuated from their 
homes.' 

.# Sfiidi* ^Edward Kennedy 
•completed a four-day visit to 
Poland, . during Which be met 
.Polish ^officiate a* rweU as Mr 
)Lech Walesa and other; Soli- 
Ttortty leaders: 



visit seals 
Quebec understanding 


BY ROBERT GtBBENS IN MONTREAL 

FRENCH PRESIDENT Francois 
Mitterrand has begun the first offi- 
cial visit by a French head of state 
to Canada for 2Q years, emphasis- 
ing that a modus vivendi been 

. reached between Ottawa Paris 

. on France’s role' in Quebec's devel- 
opment 

President Mitterrand has started 
his visit in Ottawa, and will address 
the House of Commons. Then he 
flies to Gaspi, in the Golf of St Law- 
rence, where explorer Jacques Cart- 
ier landed in 1534 to found New 
France. 

Next he goes to Quebec City and 
Montreal. Finally be flies to Sas- 
katchewan in the West, bade to Tor- 
onto and then to St Pierre et Miq- 
uelon, the two French owned is- 
lands off the coast of Newfound- 
land. Ottawa and Paris are in dis- 
pute over Canada's claim to a 200- 
mile offshore limi t. This would re- 
strict the fishing righto of the two 
French foijmds . 

Since President de Gaulle shout- 



Mr P nmrn h Mitterrand 

ed his famous “Vive le Quebec Li- 
bre" from the balcony of Montreal 
City Hall in 1967, Ottawa and Paris 
have been at loggerheads on Que- 
bec. Successive French ministers 
have openly interfered in Canarfinw 


domestic -affairs • by encouraging 
Quebec separatism, while Quebec 
provincial governments have play- 
ed off Paris against Ottawa in the 
fight for more political autonomy. 

The Conservative Government of 
the Prime Minister, Mr Brian Mul- 
rbtiey. In Ottawa has recently 
.reached a. tentative formula to 
bring Quebec into the 1882 Canadi- 
an' constitution and has fa-fcd hard 
to end 20 years of bickering over 

Quebec's representation in Paris. It 
has authorised Paris and Quebec to 
have direct diplomatic ties on a 
wide range at subjects without fed- 
eral supervision. 

No federal minister will be on 
hand when President Mitterrand is 
in Quebec and Montreal during his 
visit 

French officia l s have indicated 
that Paris now accepts Canada as it 
is, and is interested solely in ex- 
tending basic economic and cultural 
ties. i 


Le Pen’s ghost attends Chirac feast 


BY GEORGE GRAHAM M PARIS 

MR JACQUES CHIRAC, 
France’s Prime Minister, yester- 
day sought to lay to rest flw 
dissensions over how to deal 
with the extreme right whig 
which has split his majority in 
the past few weeks and threaten 
bis chances of success in next 
year's, presidential elections. 

The Prime Minister appeared 
last week to have decided in 
favour of trying to woo voters 
away from die extremist Front 
National Party beaded by Mr 
Jean-Marie le Fen. Yesterday, 


however, he held a conciliatory 
meeting with members of bis 
Government who had wanted to 
denounce Mr le Pen’s anti- 
immigrant, anti-AIDS rhetoric. 

Among them was Mr Michel 
Noir, the Trade Minister, who 
last week came close to resig- 
nation from the Government 
over the issue of the current 
attitude to adopt to the Front 
NationaL Had Mr Noir gone, 
up to five other ministers might 
have felt compelled to follow 
his example. 


The ghost of Mr Le Pen was 
very present on Sunday at what 
should have been the feast to 
launch Mr Chirac’s candidature 
for the presidency — a 35,000- 
strong convention of his RPR 
party. 

The Front National leader 
was never mentioned by name, 
but every speech was assessed 
in terms of the attitude it 
expressed towards the extreme 
right, which is currently win- 
ning 10 per cent of the votes 
in opinion polls. 


Gadaffi calls for industrial reform 

BY TONY WALKER IN CAIRO 


COLONEL Muammar Gadaffi of 
Libya has attacked his country’s 
economic performance, stating 
that industry is on the verge of 
collapse and beset by misman- 
agement; theft and absenteeism. 

In a harsh critique of Libya’s 
economic problems. Col Gadaffi 
called for urgent refonns to 
provide incentives to workers, 
art imports and encourage ex- 
ports. . 

•'Industry in this country 
will not progress. On the con- 
trary, we expect -that in the 


rmning period the ta An Atrial 
base, which we have estab- 
lished, will collapse,” be told 
senior officials in a speech 
shown on television at the 
.weekend. 

It appears to have been Col 
Gadaffi’s bluntest statement yet 
on the economic malaise affect- 
ing his country, which has been 
hit hard by the oil price falL 
The speech is regarded as a 
further sign of pressures on the 
. Libyan leader ...... .. 

Libya's oil revenues in . 1980- 
1081 reached about $20bn 


(ElZbn). Oil exports dropped 
to about $5.5bn last year. 

Col Gadaffi has also been en- 
gaged in an expensive war in 
Chad. His forces were routed 
in Marti in northern Chad with 
the loss of milHans at dollars' 
worth of military equipment, 
most of it supplied by the 
Soviet Union. 

Libya’x experiment with a 
primitive form of grassroots 
socialism appears to have 
yielded. .. lew g . benefits. .. The 
private sector has been stifled 
and shortages are endemic. 


Indian riot 
cities (nit 
ler tight 


1 1 1 


security 

THOUSANDS of soldiers and 
police tightened their grip yes- 
terday on the north Indian city 
of Meerut and on Delhi’s old 
walled city, Renter reports from 
New Delhi. 

The two areas have been 
ravaged by nine days' of. Hindu- 
Uoslem violence that has; killed 
at least 80" people. .; "v : 'v 

The rubble-strewn ; . Streets 
ware deserted except. police 
foot patrols and. co nvoy s of 
army trucks with ' mounted 

win rWnfc g mw. 

Security forces continued 
house-to-house searches for 
weapons and rounded up sus- 
pects. Police described the 
situation in Delhi and Meerut 
as tense but under control 
Eight people have been killed 
since Tuesday in the capital’s 
congested walled city where 
about 800,000 people live. 
Meerut, which is under curfew, 
looked like a ghost town, with 
even the animals shut away. 

Authorities have banned all 
public gatherings except re- 
ligious services in Uttar 
Pradesh state, east of Delhi, to 
forestall further communal 
clashes. The fi ghting there in 
the past week has been some of 
the bloodiest since the India- 
Paktetan partition riots of 1947. 

The cause of the note in both 
Delhi and Meerut to unclear but 
tension between the majority 
Hindus and minority Moslems 
is so high that even a trivial 
incident **° n spark a communal 
flare-up. 


Zambia appeals 
for Nordic aid 

By San Webb in Stockholm 

MR KEBBY MUSOKOTWANE , 
the Zambian Prime Minister, 
held talks with Swedish 
ministers yesterday in Stock- 
holm to appeal to Sweden for 
further aid. 

Mr Musofcotwane began his 
tour of the Nordic aid donors 
In Sweden, saying: “It was not 
by mistake, but by a deliberate 
plan, that we came here first." 

Sweden donates more than its 
Nordic neighbours in aid to 
Zambia and places priority on 
three areas—agrieultnre. health 
and education. Swedish aid to 
Zambia amounted to SKr 205m 
(£lBfim> in the- 198687 finan- 
cial years and will be increased 
to SKr 230m in 1987-88. 


Black metalwork unions merge 


BY ANTHONY ROBINSON IN JOHANNESBURG 


SEVEN black trade unions in 
South Africa’s engineering, 
automobile and metal-working 
Industries have merged to 
create the 13%000-strong 
National Union of Metal- 
workers of South Africa. They 
elected Mr Moses Mayekiso, a 
union leader presently on 
trial for treason, as their first 
general secretary. 

The new onion groups to- 


gether -three motor industry 
unions, engineering onions 
and general unions with mem- 
bers across a broad spread of 
engineering. It will affiliate 
with the Congress of Sooth 
African Trade Unions, the 
largest union federation. 

The culmination at the 
weekend of nearly two years 
of merger negotiations marks 
a big step forward In the 


federation’s aim et reorganis- 
ing the union movement into 
a few powerful anions on the 
basis of one industry, one 
union. 

Mr Mayekiso is awaiting 
trial on treason charges aris- 
ing out of his role as an 
unofficial community leader 
in the Johannesburg township 
of Alexandra. 


Anthony Robinson on S Africa’s newest homeland 

Screams in the night in a 
KwaNdebele police ceil 


SWORN affidavits signed by 
three black reporters from the 
Johannesburg Star newspaper 
have provided graphic con- 
firmation of police brutality in 
KwaNdebele, the dusty home- 
land north of Pretoria which is 
destined for so-called "Inde- 
pendence” later this year. 

The three reporters, includ- 
ing senior reporter Jon Qwe- 
lane and photographer Herbert 
Mabuse, were detained for 
three nights in crowded police 
cells at Kwaggafontein last 
week. They reported that at 
least seven detainees were 
beaten unconscious with pick- 
handles before their eyes 
during interrogation aimed at 
linking them to widespread 
resistance against the latest 
Pretoria-backed plans for inde- 
pendence under Chief Minister 
George Mahlangu. 

They saw at least 10 other 
incidents where detainees were 
punched, kicked and threatened 
and heard screams throughout 
the night followed by the re- 
turn of badly beaten detainees 
to the overcrowded cells. 
Colonel Andries Kuhn, the 
Afrikaner deputy police com- 
missioner in KwaNdebele, said 
the police woud Investigate the 
complaints. 

KwaNdebele to a notional 
state carved out of Transvaal 
highveld bush to accommodate 
an estimated 500.000 people 
deemed to be Ndebele, rem- 
nants of an Nguni -speaking 
tribe scattered in the late 19th 
century after repeated clashes 
over land and cattle with armed 
Boer commandos. - - • * . . 

Many have re-settled there 
over the past decade after 



forced removal from their 
settlements or eviction from 
farms. But the majority have 
built homes ran g in g from ela- 
borate ranch-style bungalows 
to tin and cardboard shacks as 
the only way of securing a 
home within proximity of work 
in the Pretoria or Witbank 
areas. For over 40,000 Ndebele 
this means daily commuter bus 
rides of up to three hours each 
way. 

As part of the preparations 
for independence Pretoria is 
investing large sums in infra- 
structure and offering com- 
panies generous inducements 
to re-locate at two industrial 
growth areas. Siyabuswa and 
Ekandustria. The latter is only 
90 kms from Pretoria at the 
southern extremity of the 
homeland. Pretoria is also fund- 
ing a : new u capital " called 
■KieaMahtangu whose new. legis- 
lative. assembly, post -Office, 
ministerial buildings and sports 


stadium have continued to rise 
from the virgin bush over the 
past 18 months despite the re- 
jection of Independence by the 
Legislative Assembly last 
August. 

Rejection was greeted by 
widespread jubilation and 
spontaneous celebration, especi- 
ally in the Moutse area where 
over 120,000 non-Ndebele speak- 
ing people had been forcibly 
incorporated into the new state 
amid violent protests. Over 120 
people died last year in clashes 
with vigilantes called the Mbo- 
khoto. These vigilantes were 
linked to the brutal Minister of 
the Interior, Mr Piet Ntuli, who 
is believed to have blown him- 
self up accidentally last July 
while carrying a bomb in his 
car. Two months later the pro- 
independence Chief Minister, 
Mr Simon Skosana, died of dia- 
betes was was replaced last 
November by Mr . George 
Mahlangu. 

Mr Mahlangu, who managed 
to reverse the anti-independence 
vote last month after the arrest 
or flight of key opponents, in- 
cluding leading tribal chiefs, is 
closely identified with the Mbo- 
khoto vigilantes. The transvaal 
Attorney General is in posses- 
sion of affidavits accusing him 
of abducting and torturing 
youths during the rebellion 
against independence last year. 

Despite the anguish of several 
white officials, and widespread 
popular opposition, Pretoria is 
still determined to go ahead 
with "independence", a solu- 
tion which will remove another 
half-million blacks from 
“ white ” South Africa. 



The Wall Street Journal 
Europe takes pride in its repu- 
tationfor accuracy in matters of 
feet 

But there’s much more to 
The Journal than that 

Because facts and figures go 
only so fen They reflect events, 
but they cannot r^aect on them.. 
They; provide information, but 
not insight, comment or opinion. 

Peop^ i>n the other hand,; 
can. Which % why when you 
want a true picture, we believe 


.V.-, 


It Quotes International 
Business Figures. 


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that a sentence with quotation 
marks at either end is worth a 
thousand words without 

And why, when we cover a 
story we won’t rest until we hear 
what all the principals have to 
say 

In short, when it comes to 
figures, The Journal offers you 
two varieties. 

Those you should be look- 

ingat 

And those you should be 
listening to. 


4 


And It Quotes International 
Business Figures. 

Vlf God went public at 60 times I 

earnings, rd have a problem with it,” says 


<$> 


H adding, “I’d rather be a pimp with a purple 
gf hat . . . than be associated with banks." 


|"Once Volcker made his comment,! the dollar) 
came down real fast. Everyone said, 'Wait 
■ 1 a minute, that sounds like Baker's speech. 


iliSI 

THE WALL STREET JOURNAL, 

EUROPE 













PROJECT YANKEE TONIGHT 
ON 1TVAT9PM 


Financial Timer Tuesday Hay X 


ext month, 
amid a fanfare of 

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publicity, millionaire and 
entrepreneur Richard 
Branson wiU start die 
adventure of a lifetime 
- he will attempt to cross 
the Atlantic from the 
USA to Europe in a hot 
air balloon. 

Tonight, in 'Project 
Yankee’, TVS takes a 
look behind the scenes. 


Television South film 
crew has followed the ups 
and downs of tests and 


trialswith the worlds 
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to cross the Atlantic. 

Bransons greatest 

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three times further than 
man has ever achieved 
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Watch 11V on Tuesday. 
The Balloon goes up at 










r 




Fin&GcSaJ I 5 fies^ 3 Siesddy May 26 1987 


OVERSEAS NEWS 


Manila privatisation row 
delays sale of oil entity 


BY RICHARD GOURLAY IN MANILA 


PRIVATISATION in the Philip- what is appearing as a funds- bar previous public support tor 
pines is la g gi n g amid signs that mental division in the - cabinet- urivatbation. 


lental division in the -cabinet. 
There is growing disappoint* 


privatisation. 

In March, the corporation's 


— vuy wi|ivsauv UO 

back ment among top finance depart- board approved a privatisation 
y . meat officials that their efforts plan lor the company's distribu- 
Snent- to impalement Mrs Aquino’s tion nd refining arm. which 
economic policies are being would leave 35 per cent of the 


P reside nt Corazon Aquino’s There is growing disappoint. In March, the corporation’s 

ment t0 P ffiwnee depart- board approved a privatisation 

her pubucly stated polfty - of- ment officials that their efforts plan lor the company's dlstribu- 
enc ourag! ngf oreign mvesSnent to impalement Mrs Aquino’s tion nd refining arm, which 
“ *" a country. _ economic policies are being would leave 35 per cent of the 

A row nas erupted over pn- blocked by nationalist ministers, shares in government hands, 
vadsation of part of the Phflip.?. .JBks., -Aquino. .. yesterday British Petroleomia among 
pme National Oil Corporation, ordered the government’s Com- potential buyers. The corpor? 
wluch Mr Jaime Ongpin, the mittee on Privatisation, led by tion is valued t between 983m 
Finance Secretary, has loudly Mr Ongpin, and the oil entity to nd 9165m. 
advertised as the Government’s resolve, thetir differences. How- More thaw us government 


first big prospective disposal. eVef, she also asked Mr Ongpin entities have been identified for 
* Joher Arroyo, the presi- why a profitable government privatisation but none have 
dent s influential executive sec- corporation should be priva- received so far approval from 
retary, has opposed the move in tised . apprently going against Mrs Aquino. 

Fiji poi^; ifeal appears fragile 

BY CHRIS SHHIWBA IN SYDNEY 4 

PUTS COMPROMISE power Significantly, Lt Col Rabuka . Although Dr Bavadra now 
arrangements appeared increas- joss not specifically named on .says he opposes participation 
ingly fragile yesterday. the 19-member council yes ter- 'because ' the council was 

The government leaders who 4ay, even (hough he is a mem- illegally installed, he ' also 
were deposed in the May 14 ber - Instead his position as appears to be unhappy because 
military coup boycotted the "8m j Adviser on home affairs u includ- its membership is imbalanced 
meeting of the Governin'- ^disciplinary forces " was in favour of Batu Mara’s AHi- 

General’s new council of allocated to "the officer cam- ance Party, 
advisers. TUs followed the ma nn i ng the royal Fiji military His campaign of civil dis- 
dedsion of their two-party reporting direct to His obedience ^expected to get 

coalition to call a campaign of * h * Commander -m- today^rith calls for 

civil disobedience against the ChieL strikes by sugar workers and 

compromise. Despite his boycott; Dr shop closures in Suva, Nadi 


More than 115 government 


military coup boycotted the-fim 
meeting of the Govern®?-' 
General’s new council of 
advisers. This followed the 


S. Korea 
ministers 
may quit 
over torture 

.By M aggi e Ford in Seoul 
ALLEGATIONS of a police 
cover-up. in the Investigation 
of the torture to death of a 
South Korean student, are 
thought likely to provoke the 
resignation of a number of 
Cabinet ministers this week. 

President Chun Doo Hwan 
has ordered a full ' investiga- 
tion into the cover-up.' which 
was revealed by a group of 
' Ca t holi c priests acting on 
information from the dead 
student's father. 

Two police officers were 
originally charged with the 
murder of Pak Chong Choi, 

21, who was suffocated when 
hts head was forced bate water 
in. a bath-tub during interro- 
gation. ' According to the 
family of one of the accused 
officers, at least three more 
policemen were involved. 

When the death of the 
student was revealed in 

January, the home affairs 
minister and the poh'ee chief 
were sacked. South Korea's 
president apologised to the 


Kevin Done reports on a poll arising from a dispute over a US base 

Modernised Greenland votes today 

wriM BALLOT papers and in early 1985 — bot the strong the Arctic region and the the overwhelming rote played 
election literature delivered by desire for Greenlandac auto- North Atlantic. by the Home Rule adminis- 

helicopter and dogsled to the nomy has not undermined his The US has been undertaking tration »n«t the public sector 
isolated Arctic co mm u n ities, continued firm support for the a far-reaching modernisation of in Greenland's fragile econ- 
Greenland, the world’s biggest presence of two US military the Thule base with the installs- omy. 


i s land , goes to the polls today bases in the country. 


tion of phased array radar, and Concern that private interests 


A * (he fourth time since the Under the terms of home a heated debate broke out in were being squeezed out has 
country won the right of home rule, Denmark retains control Denmark and Greenland in the given birth to a new party, 

rule from Denmark in 1979. of foreign policy, defence and spring with claims from the left Issittup-Partii, Polar Party, 

A Danish colony until 1953, justice, but almost all the wing that the new equipment formed by interests in Green- 

when it became an integral part other functions of the old breached the terms of the 1972 land’s fishing industry and 

of the kingdom of Denmark, colonial * * «• — *— ■ *™* /*-*• — 


Greenland has gone' through a handed over to the local ad- Missile) Treaty. 


been US/Soviet ABM (Anti-Ballistic business community. 


turbulent period 


hectic ministration. 


could now upset the pattern of 


The critics, which included Greenlandic politics established 


development in which the old The process will be completed the small left-wing Socialist since 1979. 


Eskimo — or Inint as the Green- when control over the health Innit Ataqatigiit party whose 
landers prefer— hunting cul- 

‘There has been a colossal change. My father 
a modern industrial welfare used to sit In a kayak and hunt seals— and we 

! 5 Sd oS e rSSrai-£te^ 2 ve Ii S lived from his hunting. We have gone from the 
log industry and continuing kayak to being a modem society, with all its 

pluses and minuses/ 

and suffering from deep-rooted &******> 

social problems. " “ 

“ There has bees a colossal service is transferred to Nuuk, ultimate aim is indep end- 


party whose Hitherto the dominant role 

has been played by Mr Motz- 

r„ feldt’s Social Democratic 

Ly iauier siumut party, which has ruled 
—and we either alone or in coalition with 
from thp more extreme left-wing In ait 
irwm luc Ataqatigiit <IA) party. At the 
u ail itS last election In June 1984 
Siumut won 441 per cent of the 
. votes and 11 seats, LA won 12.1 
. . . . per cent and three seats, and 

w -hwepeno- the centrist Atassut Party won 


change; my father sat in a kayak the Greenlandic capital at the enee for Greenland claimed 43.8 per ce at ai ,d n seats. Both 

and hunted seals and we lived beginning of 19S9. that the new radar was siumut and Atassut are in 

from his hunting," says Mr Although security policy is a P® 2 * F® “ ®far ” favour of Greenland remaining 

Jonathan Motzfeldt leader of handled from Copenhagen, it s H?J? glc . Def ®“ c ® Initiative a part of Denmark though with 

Greenland's Home Rule govern- was a dispute over theUS radar <SD1> *“ d ““ d fo J extensive autonomy, 

ment and chairman of the ruling wo a * Thule in the extreme aetSve missfle defence through Since the Home Rule adnunis- 
Sodal Democratic Siumut Party, north-west of Greenland which ^ . contro1 01 anti-missile tration took over in 1985 the 


civil disobedience against the atrikes by sugar workers and 

compromise. Despite his boycott; Dr shop closures in Suva, Nadi 

Dr Timoci Bavadra, the Bavadra appeared further down Lautoka. Calm returned to the 

deposed Prime Minister, and 1316 Bst as adviser on heaBh streets of Suva yesterday after 

his deputy, Mr Harish Sbanna, ^ 501:181 welfare, while Mr more than a week of disrup- 

had both been named to the Sbanna was allocated the labour - tion. 

council of advisers. Portfolios imm igration portfolio, 

have been allocated by Raltu Sir Neither -has been sworn in, or 

Penaia G anfiau , the Governor- even seen the GcvemorGeneral 
GeneraL * .since- their original indication 

The Governor - General ^ey were pjepared to serve on 

assigned the foreign affairs counci1 '. 

position to Ratu Kamesese It seems dear . that the 

Mara, the former Prime Minister Governor-General has been J 

who was defeated in last forced to compromise with ■ # 

month’s general election and Lt-Col Rabuka" more than he Mo 

who joined the military regime wished in the composition of 

initially set up by Lt Col the council, thereby sntagonia- _ ■ _ _ 

Sitivem Rabuka. ing Dr Bavadra. the past tfe Cfl fl fc C it 


people for the human rights parties were formed only 10 
abuse. years ago. 

News of the police cover-up “ We have gone from the 
comes at a bad time for the kayak to being a modern society 

Government. Popular protest with all its pluses and minuses." 
la growing against the presi- A Lutheran minister with 
dent’s decision to call off talks pretensions to becoming Green- 
that would lead to democracy land’s first bishop, Mr Motzfeldt 
unto after the Olympic Games has led Greenland out of the 
here next year. European Community — it left 


which has dominated Greenland precipitated today’s election. , . . , -KGH. the Royal Greenland 

politics since the first political p v y After long debate the Trade Department, whkh from 

parties were formed only 10 The US bases were estab- Folketing, the Danish Parlia- the early colonial days in the 

years ago. lished under the 1981 Danish- ment. supported the Govern- 18 th century has enjoyed a 

“ We have gone from the American jgreement on the de- meat’s stance, however, that monopoly on trade from Den- 

kayak to being a modern society fence of Greenland* and Thule the new radar was purely mark, has been expanding 


with all its pluses and minuses." has the vital function as an in- defensive in character. rapidly especially in the all- 

A Lutheran minister with tegral part of the US Ballistic Ironically the base has important fishing industry with 
pretensions to becoming Green- Missile Early Warning System played little part In the elec- the takeover of most of the 

land’s first bishop, Mr Motzfeldt (BMEWS), giving it a key tion campaign, which has been country's fish processing plants 

has led Greenland out of the role in the surveillance and dominated instead by the and the buid-up of a substantial 

European Community — it left control of the air space above question of privatisation and new trawler fleet. 


FOCUS ON INTERNATIONALISATION OF JAPANESE MANAGEMENT 


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±mfter a successful rebuUding programme over 
the past decade* Canon Inc. is now directing itself to becoming a 
truly global corporation. 

A large R&D budget is at the core of the group’s success to 
date, and a stream of new products will keep the company at the 
forefront of business developments. 

Along with this* Canon is progressively boosting offshore 
production, as it seeks to become a globally integrated organisation 
with an even broader spread of operations. 

Canon 9 s President* Ryuzaburo Kaku* recently discussed 
Canon’s prospects along with the President of Canon Europa, 
Ihkeshi Mitarai andlbuneo Enome* President of Canon Bretagne 
.-.in France. 

By Brian Robins 






left to right: Huneo Enome President of Canon Bretagne SA^ Ryuzabum Kaku, President of Canon Inc; 
Thkeshi Mitarai. President cf Canon Etavpa N.V. 


Towards a Globally Integrated 

Corporation 


Robins: 1987 marks Canotfs 50th 
year of operation. Looking back 
what two or three decisions or de- 
velopments attributed to the groups 
success? 

Mm Because of the impact of 
the Cm oil crisis, Canon had to sus- 
pend dividends in early 1975. Ac that 
time we began a company-wide cam- 
paign to devdop into a "premier com- 
pany'. We carried out tins campaign in 
several phases. Firstly, vie sought to 
attain the criteria for becoming a 
•premier company’ by developing the 
best possible means for our R&D, 
production and marketing. In order 
to devdop unique technology in the 
early stages, we gradually increased 
R&D spending as a per cent of sales. 
It has grown from two to three per 
cent of turnover at that time; to over 
10 per cent today. 

Secondly, by iriopting a product 
development system, we tried to revi- 
talise our operations, giving respon- 
sibility to -lower divisions, so they 
could work out the means of devel- 
oping new products by themselves. 

Thirdly, as part of our corporate 
philosophy, our basic idea is that we 
must work for mutu al p ro sp e rity and 
co-operation throughout the world. 
Along with worldwide marketing and 
production, we are also studying the 
feasi bility of having R&D activities 
to our i wnwnarirawi operations. 
X these are the three mam 

reasons, or events, behind our success. 

Foreign parts supply: 
Vital to continued success 

Robins: Canon's philosophy of 
‘mutual prosperity has resulted in a 
sizeable increase in foreign production 
and also the sourcing of key com- 
ponents offshore. Can you provide 
some details? 

Kaku: Canon has always worked 
closely with foreign expert suppfiers to 
jointly develop new parts and com- 
ponents integral to our products. In 
the semiconductor field, for otample; 
wc.bave been dealing with companies 
. pw- thaw Instruments, Fairchild, 
Motorola, National Semiconductor 
and intd. We are one of the largest 
Importers of semiconductors into 
Japan* importing 17 bflCon, whkh is 
equivalent to 24 per cent of the total 
of 129 (20Q rnUfian chips) we 

purchased last year. We will boost the 


ratio of overseas chips to almost 30 
per cent according to our planned 
imports for this year as weO as sourc- 
ing additional chips from US groups 
manufacturing in Japan. 

As an example, we wS be import- 
ing jointly-developed LSI chips from 
Intd Carp, for our new range of 
photocopiers and printers. ShnUariK 
with National Sem ic on du ctor, we are 
co-operating to devdop integrated 
dr c uii s and software for new prod- 
ucts. Our new laser beam printer, for 
example; wifi incorporate its 32-bit 
microprocessor. And, in the camera 
field. Motorola’s microprocessor is 
used in our newest antofocus srngfe 
lens reflex (SLR) camera, EOS. With 
these activities underway; we cannot 
understand nraflh of the ongoing trade 
difficulties with the US, since our 
foreign suppliers are integral to our 
entire operation. 

European production 
growing rapidly 

Robins: What ' proportion of 
^Canon's production is located off- 
shore. and wdl this increase? 

Enome; My. responsibility is 
for office products manufacture in 
Europe, and we have operations in 
Ranee and Germany. In toms of sales 
amounts, we produce half of an sales 
m Europe; and in terms of the number 
of tmr«, we produce a&nrt 60 per cent 
of our volume sales. 

Robins: How has that figure 
moved over the past few yearf? 

Enome: In Germany, since we 
started about 15 years ago, the growth 
of manufacturing has been approx- 
imately 10 per cent a year. But in 
France; where full-scale production 
began nearly three years ago; we are 
expanding production at an annual 
rate of 50 per cent. 

Robins: Before the revaluation of 
the yen against the US dollar, up to 70 
per cent of Carton k revenues came 
from overseas. What do you think is 
the best balance between exports and 
domestic sides in Japan? 

Mrtarah uniting only m terms 
of the ease of management, if the 
percentage of domestic sales is higher, 
it is coder for us to run the company. 
But as I am engaged in selling our 
products overseas,, the percentage of 
overseas sales could be higher still 
In terms of the purchasing power 


of each couutiy, and 1 think th is 
percentage will grow gradually. 

International 
integration the key 

Robins: Do you see the day when 
Canon’s head office wdl serve little 
more than a co-ordination function, 
also with responsibility for RAH or is 
this too driatic a view? 

Kaku; As the end result, we are 
feeing in this direction, but not be- 
cause of the sudden hike in the yen. 
Even before this, we had such a plan. 
When I established the second phase 
of the "p re mier company plan’, I con- 
sidered two things. 0) Due to tech- 
nological advances, Canon wifi face 
more direct competition with big 
companies in Japan, for exam ple , the 
large electrical appliance companies, 
and (2) Canon fats to be a company 
operating globally — contributing to 
the local society wherever we ga As 
Mr. Mitarai said, if you consider the 

real purchasing power of each country 
we should be doing more overseas 
business, and doing the most for 
each local market, fay developing and 
producing products most a p propr ia te 
fix that area. Tb achieve that, we 
cannot continue the system of ex- 
porting from Japan any longer. We 
should produce the products hi the 
major countries, which are required 
m ffrat side 

Writ this in mind, we have es- 
tablished plants at Bretagne (Ranee), 
Virginia (USA) and in newly industri- 
alising countries of Aria. We had 
been trying to achieve this even be- 
fore the sudden yen hike. But while 
doing this, we were hit by the yen 
appreciation. The ideal would be for 
only 25 per cent of products to be 


manufactured locally (in Japan) for 
domestic sales, with the rest manu- 
factured in overseas markets. 

Robins: Canon has successfully 
handled the shift from consumer prod- 
ucts to office products. What new 
product developments are underway? 

Kaku: As of this moment, there 
are three main product areas — 
cameras, business machines and op- 
tical products. Although we are not 
limited to these areas, they represent 
the main product groups. Even within 
these areas, there are so many new 
fields we can pursue; For example; in 
cameras, we are now working very 
extensively with 8m m video cameras. 
Rjt future camera systems, we are 
working on still video; and selling 
some to professional users. With of- 
fice automation (GA) products, we are 
working from OA to home automa- 
tical, from stand-alone products to 
systematised products. In the optical 
area, we are working on semi- 
conductor fabrication, medical and 
broadcasting systems. In, for example; 
GA systems, there are mart? things still 
to be done. 

While we are restricted from 
moving into totally non-related areas, 
work m one area may result in related 
fields bring developed. For example; 
in our copiers, we are working on 
amorphous silicon photosensitive 
drums, and this technology may be 
used in solar cells, solar energy and 
riniibr win »c Although I am IhHirtg 
our people not to move into non- 
related areas, even if we work within 
our existing areas, new business op- 
portunities will undoubtedly arise; 

With research and development, 
it is just like a cell, which reproduces 
itself by dividing into two; and then 
into four; Much of our work is 
something Hke this. At least until the 


next century, I am not worried about 
our businesses being limited. Canon 
started as a camera manufacturer, but 
now we are developing in the direction 
of information processing. 

Robins: Is that a natural exten- 
sion of your activities in office 
automation? 

K a lro: We are working extensively 
on opto-riectronks systems, and this 
may see us working in biotechnology, 
which has nothing to do with our ex- 
isting business. It’s like an invention, 
yon cannot invent something by your 
efforts alone. Often, by coin ciden ce, 
you discover something. Canon’s 
R&D activities are very similar to that. 

Robins: How do you see your 
USD expenditure (expanding in the 
future? 

Kaku: On a parent company 
basis, apart from medical or phar- 
maceutical companies in Japan, 
Canon spends probably the largest 
portion of sales revenue on research 
and development of any company in 
Japan, and this will continue; 

Robins: Do you have ideas 
about some special events to com- 
memorate the 50th anniversary of 
the company? 

Kaku: Far the first time; we wifi 
p a rtic ipa te in TELECOM ’87 in 
Geneva this autumn to show our 
latest technology in the telecom- 
munications field. Also; we will 
organise Canon Exhibitions, first in 
Tbkyo fhi's autumn, nnd next spring 
in New York, Los Angeles and 
London to exhibit a total vision of 
our technology, corporate philosophy 
and corporate culture. Wfc mark 1988 
as our "second initiation’ year of the 
company to make further develop- 
ments and become a really global 
corporation to realise co-existence 
and co-prosperity in the world. 


Canon 


Canon tne. 

7-1, Nishhshinjuku 2-chome. 
Shinjuku-ku, Tokyo 163; Japan 
Tel: (03) 348-2121 Telex: J22697 

Canon Europa N.V. 

Van Lajenfaerghlaan 221, RO. Bor 7907, 
1008 AC Amsterdam, The Netherlands 
Tel: 020-5492911 Telex: 15094 


Canon (UK) Ltd. 

Canon House; Manor Road, 
WaJlington Surrey. SM6 QAJ, England 
Tel: 01-773-3173 Telex: 884838 

Canon Bretagne S-A- 

Les Landes de Beaugg 35340 Lrffre, 
France 

Tel: 99-685111 Telex: 740496 





■ i 


. .-3k. ^ 




6 


Financial Times Tuesday M*y 26 1987 


American 
Airlines 
announces 
three new 
daily flights 
from Europe 
to America. 


Zurich and 
Geneva 
to Chicago, 
Frankfurt 
to New York 

and 

Paris/Orly* 
to New York, 



AmericanAirlmes. 
The American Airline. 

For reservations, caR your travel agent or 
nearest American Airlines office. 

•From Maya 



OVERSEAS NEWS 


Ireland to vote on 
Community act 


BY HUGH CARNEGY M DUBLIN 

IRISH VOTERS will deliver their 
verdict today on the Single Euro- 
pean Act, the attempt to give added 
impetus to economic and political 
co-operation in the European Com- 
munity which has been held up for 
almost six months by Dublin's fai- 
lure to ratify. 

The Flanna Fail Government; the 
{main opposition parties and the 
main farmers' and employers’ orga- 
nisations head the list of those cam- 
paigning for a majority in favour of 

the act in the referendum to end an 
anxious period in which Ireland's 
I ra mmitmon* tp EC appeared to 
! waver. 

Their campaigning took cm a 
more confident note over the week- 
end following an opinion poll last- 
week -the only poll of the referen- 
dum which indicated a 2-1 vote in 
favour. 


But the poll showed nearly 10 per 
cent of voters un de c ided and the 
coalition erf left-wing parties, trade 
unions, copstitutior«flists and 
church groups opposed to the act 
are bopiog these may swing the 
vote their way. Their main objec- 
tions are that the act would under- 
mine Irish neutrality, weaken the 
ecomnny and threaten the introduc- 
tion of abortion and divorce. 

The Act, trf which the Iridi Govern- 
ment wax an enthusiastic advocate, 


should have come into effect in Jan- 
uary. It has been held up while its 

constitutionality was tasted to the 
Irish courts. Tim Supreme Court ap- 
proved its econ om i c provisions but 
rejected the foreign policy 


like result is due tomorrow. 
Feature, Age 23 


Gonzalez In onion talks 


[ THE SPANISH Prime Minister, Mr 
Gonzalez, met the socialist 
of Spain's largest trade 
onion yesterday seeking to heal di- 
visions over wage policy in advance 
of elections next month, Reuter re- 
ports from Madrid. 

After his two-hour meeting with 
Mr Gonzalez, Mr Nicolas Redondo, 
leader of the General Workers 
Union {DGTJ said: 'This was a fami- 
ly matter." It was (he first meeting 


between the two men since last Jan- 
uary when the UGT rejected a call 
to Emit wage rises to around 5 per 
cent 

The talks took place amid con- 
tinuing strikes over wages by doe- 
toss and miners. Eight poBctmen 
and five workers were injured dar- 
ing fresh dashes b e tween police 
and workers opposing shipyard Job 
cuts in the soutiiern port of Potato 
Rea], according to union officials. 


Danish 
shippers 
urge move 
on register 

By Kevta Brown teLondteu 

DANISH s hip o wner* stepped up 
pre s u me on the Government over 
the weekend for argent interven- 
tion to end a wave of transfers from 
the Danish shipping register to for- 
eign flags. 

Mr Erik Bohn, d ni m u n of the 
Danish Shipowners’ A ss oc iation , 
said 21 ships of 82 ,9 25 tons dead- 
weight had left tire Danish register 
this year, reducing the fleet to M3 
ships of &Sm tons. 

This is hi line with dramatic xe- 
ductio ns far the fleets of moat of the 

tytKtiwwT (Miifa'iM «i»«w»i* Wkwl. 

est hit have been the UK and Nor- 
way; where proposals for an off- 
shore register axe passing through 
Parliament 

Mr Behn called for the estahBsh- 
ment of a Danish international reg- 
ister which would allow shipowners 
to employ foreign cre ws at local 
rates of pay. 

He aho warned Chat tagjatotion 
passing through the Danish Parlia- 
ment which would bar ships fom 
transporting weapons to nations at 
war would have serious conse- 
quences for the viabiEfy of the fleet 


Rains ravage Chinese province 


BY DAYS) DOOWELL IN HONG KONG 


THE WORST rains in 13 years 
have ravaged China’s southern 
Guangdong province in recent 
days. Local radio stations re- 
ported 92 people killed, 400 
injured, and more than lm 
people displaced from their 
homes. 

While more than 100,000 
people have been mobilised to 
fight the floods in 72 cities In 
Guangdong; so firefighters in 
northern China continue to try 
to bring under control the wont 
forest fire recorded in the 
co un try' s recent history. So far. 
at least 200 people have been 
killed by the fire, which 
threatens to spread to eastern 
Mongolia. 


Worst hit by floods in Guang- 
dong appear to be the densely 
populated counties of 
and Lufeng in the east These 
have been deluged by more 
than 40 indies of rain in recent 
days. Local radio reports say 
that almost 400,000 acres of 
farmland have been submerged, 
along with I5JW0 acres of fish 
farms. 

Schools and factories aooas 
Guangdong have been dosed. 
At least 17 reservoirs have 
burst over their containing 
dams, and dozens of main road 
bridges have been washed away 
— Including some on the trunk 
road that links Guangzhou 
(Canton) with Hong Kong. 
Flood embankments along 


various main rivers in the 
Pearl River delta have been 
breached. Canton radio dm 
reported yesterday that some 
power stations have been 
damaged. 

Supplies of fresh vegetables 
to Hong Kong— which relies on 
mainland China for more than 
80 per cent of its fresh food 
have been halted. The price 
of fresh food in the British 
colony has risen and an 
important source of foreign 
exchange far fanners in the 
province has been interrupted. 

Officials in Guangzhou's 
meteorological office expect 
more rain/but a one-day respite 
yesterday r e mov e d an imme- 
diate risk of fresh flooding 


India ‘may help Tamils 

on Jaffna Peninsula* 


BY JOHN ELLIOT M COLOMBO 

INDIA is beEeved to be warning Sri 
Lanka tint ik might consider taking 
positive stops to help pop- 

ulation on the Jaffna peninsula in ' 
{he north of the island if Govern- 
ment troim ME a large number of 
dviliansiiriiigtbeircunentolleih 
live against Tamil ex tremis ts. 

TMs message is believed to have 
been brought to Colombo fay Mr 
Mam Diwit, India 1 * High Cd aumi i t - 
doner, for delivery to Mr Junius 
Jayrwardeue, Sri Lanka’s pnst- 
dent Mr Dbdt was briefed perso- 
nall last Friday by the Indian Prime 

I ppiirifr , **»■ WajiiF fawllii- 



The m a ssage marks a widening 
of the gulf be t we en the two coun- 
tries over Sri Lanka’s ethnic crisis. 
Several se ni o r Sri Lankan Minis- 
ten are now openly backing a mili- 
tary ff rt fc w ttyn pp—wffiil solution 
to tiw problem, with sharply in- 
creased army and a irf o rce activity. 
This is d flqjf ri t f India's continuing 
caOs for peace talks on the Tamils’ 
deman d s far devolution. 

Lut week Indte stepped expkvn- 
buy moo tings with Tamil groups it 
fend caflod m New Deflu became it 
decided there was no fownafliate 
chance of starting negotiations. 

The type of positive action to- 


wards the Jaffna Tunils which Mr 
Gandhi might be envisaging has 
not been specified. It couM be taken 
by the central Indian G wairaa ea i t, 
lor by the South Indian State gw- 
eminent of Tamil Nteta, whose 50m 
!W population has dose links 
with the Sri Lankan Tamils. Large 
demonstrations axe likely in 
Tamil Nadu if the Jaffna sit ua tion 


Lidia is bring severely criticised 
by Sri Lanka for allowing the Tbmii 
Nadu Government to give cheques 
worth over 23m to Tamil groups 
based in the Tamil Nadu state capi- 
tal of Madras. 


Yesterday. Sri Lanka's National 
Security Munster, Mr UUth Atim- 
lattmmdali. *aH he behoved this 
money was being sent in Madras 
on arms. The Tamil Nadu Govern' 
meat however; said the money had 
been collected voluntarily and had 
been liven to Tamil relief organisa- 
tions 

fbr several years, India baa re- 
sisted cells to intervene militarily 
in Sri Lanka to protect Thmil dvil* 
teas, and such intervention is not 
tboeght Bkabr yet But these ore 
other Indirect methods of giving 
help if the Sri Lankan array 
bunches an att-ovt attack on Jaffna 
city and if Ibc trMt s of up to 11,000 
casualties, mostly civilians, prove 
correct. 

the the past week, the Sri Lan- 
kan forces nave been making sort- 
ies from four of tbeir camps on and 
near the Jaffna peninsular, includ- 
ing Jaffna Fori; trying to advance 
towards the city. It is not yet dear, 
however, whether the Government 
has decided eventoafly to attack the 
city or only to try to put it under 
siege. 

Yesterday Mr Atindathmudali 
said infantry was advancing “a yard 
at a time." 


States face 
spendiiq’ curb 
in Australia 

By Chris Sh trwll In S y dney 
THE CANBERRA govern- 
ment yesterday ordered a 
Aflbn (£420m) cot hi the 
b or rowi ng Omits of Ai» 
tn&afe Mates and also 
second their reluctant sab- 
mtatae te a Aflbn redaction 
to the federal payments they 
receive. 

The action ode at the 
annul state Premiers” con- 
tarton. and swine that the 
state gover n me n ts win have 
to trim Spending and reduce 
ssnl — l shnsst certainly 
with tapHcsttens ter labs. 

Ihb tom enUng was oat 
from AM.4toteAM.4bii. 


Kawasaki line to cut jobs 

BY KEVIN BROWN, TRANSPORT CORRESPONDENT 


KAWASAKI Xisen K a W ra, 
one of Japan's big she shipping 
companies, is planning to cut 
its sea-going w or kf orce of 1,600 
by 40 per cent end sell 14 of 
its 41 snip*- * 

The company, which trades as 
K Line, lost Y2J*® (£9Jm) 
in 1985-88, and is predicting 
losses of Y6bn for 198&87. The 
recovery plan forecasts con- 
tinued operating loss in the cur- 
rent year, fallowed by a return 
to profit in 1989. 

K Line is negotiating the 
workforce reductions with tire 
AU-Japan Seamen’s Union, one 
of the few industry-wide trade 
unions in Japan. 

Also, about 100 shore staff 


wUl be asked to take early 
retirement. 

The drastic restructuring pro- 
posals reflect widespread diffi- 
culties In Japanese shipping; 
fallowing the collapse of the 
tanker operator Sanfco Line. 

Five of the six major com- 
panies reported losses at the 
interim stage of the past finan- 
cial year, and Japan Line was 
then forced to seek financial 
support. 

Ot the other majors. Nippon 
Yaren Kaisha has announced 
plans to cut its domestic flag 
fleet from 40 ships to 26; Yama- 
sbita-ShlxmihoQ is seeking 700 
voluntary redundancies; and 
Shows Line is seeking to sell 
several unprofitable ships. 


This advertisement is issued in connection with the requ irem e nts 
of the Council of The Stock Exchange. It docs not constitute on 
invitation to subscribe for or purchase any securities. 

CONSOLIDATED MURCHISON LIMITED 

(Incorporated in the Republic of South Africa; 
Registration number 05/05478/06) 

Rights Issue of 
2,080,000 S ordinary shares 
of 10 cents each at 025 cents per share 
Authorised Share Capital Issued 

wiflWO ordinary shares of 10 cents each R416000 
R484000 S ordinary shares of 10 cents each R2080Q0 

Consolidated Murchison Is a mining company principally involved in 
the exploration for and production of antimony ore. The rights issue 
is being arranged to raise approximately R13 million to assist in 
the financing of a number of projects which are currently being 
undertaken. 

The Council of The Stock Exchange has granted permission for the 
2,080,000 S ordinary shares to be admitted to the Official List and 
dealings in the nil paid rights are expected to commence today. 

Listing Particulars relating to the Company are available in the Extel 
Statistical Services end copies may be obtained until 9th June 1987 
from; 

Williams de Bro§ Hfll 
Chaplin & Company Limited 
37 Lombard Street 
London EC3V 9LL 


AngloTransvaal Trustees Limited 
295 Regent Street 
London W18ST 


and for two days from the date of this notice from the Company 
Announcements Office of The Stock Exriiange. Throgmorton Street, 
London EC2 2BT. 

26th May 1987 




OoocpwTtol on April 27, 2967, tbs Board of 
Directors aBproredQieccinBtflldflteaflnaix^ 
■tetamenta of the Pan 
ending December 31. 





flQMSiflT .nmen 
vnrawntAt. wjj^nfPH 
Tdul nbs Caxddffln* tu) 
gnaoBM 
Sot oaalr flow 
M Bsnot iDoons * 
BUosamsaUhllni** 

ULUdfikmaaf 

ymnchfruneff % 
6.381.0 E.mo + «g 
10M 2119 +1M.7 
Sdtn 4SBJ) -1- 4BJS 
106.0 2225 +2117 

8SL0 4390 + 48J 
SSSjO 4900 +UO0 

EABJSHT OGMBAHY 
FOteBCEALBBSUiflS 

PMhodpwritiisCtair) 

M.T 

1O0 

605 +880B 
290V+ 2M 


•' ^floEnni taoaMSte 1 enponti 

. -- 


profited from a more pro ffl oosmaamt 
enyirtmnwnt,bilt8lX5Vail,lt8; 
derives from ccmtimwus capteal eapendltoro 
afBcrts anflcraatfvug: which, altowedibr 
Inoresaos to productivity andabetteruae of 
tin Qroupteladuafarlil rajwirftge 

Th toatiUdh sas thus enabled tbs SQUUSBr 

-AT.Tl 

derelopmenti inRcaaoe, where It is pursuing 

Wflwa pWal wp^h i iw p-nglitin^ tortiri 

oQ^countrtg8,wlmretttet»grtefldaanglts 
posttdoa In strategic areas. 

prttfectetaairoiMaiidintheUhitoaauitas. 
Buna thebegxnnJhganhteya^ ajtent 
'vaitimehMalraatir bMnsfead wimthB 

American droup Jj» STEVENS forth* cqus- 

tructioncrfaplaiittnBaut^ 
to produce floor halng for the American 


Itotemmiltf to final 
Itonmnao An JB.18K 


Sbrttossoaadye^toarov.Khs results of the 

R nMMWB.*T.T.Th ww Bmnp hm nflflfcteTWl 
grtJurth. Tfafl Group has ourtalnjy 


m itom ot teg industry to KAS a. production, 
rmtoi t-rihhtn. «nl?iy whiA 

mmjJomOT^ pfpdittflyTtaii hmn 

aodttiredty tbs Group. fnScandiiisvia, the 
Gfdupbcua^ht up the go odwill of one oftho 

to erase its i ----- - - _ 

HVtto an miidtJrn'i eaabifld Wiwflmt ^ ptningMm 
■Ho-fnn-T^c^ nr tmtrtww , 



NOTICE OF DEFAULT 
To the Holders of 

Pembroke Capital Company Inc. 

9%% Notes due July 15, 1987; 

14% Notes due 1991; 

13?t% Notes due September 1, 1992; and 
11%% Sinking Fund Debentures Due August 1, 2005 

NOTICE OF SECURITYHOLDERS MEETING 

10 AM. June 17, 1987 
Manufacturers Hanover TVust Company 
270 Park Avenue 
Room 2, 11th Floor 
New York, New York 10017 

Company. 

y .^ U8 y e r thC i^ h ^ tee ^' The by related Partnership Notesof 

En f ^ I" 1 indirect wholly- 

SSSSSJ ? Great Britllin) Umited direct 

Gulf Oil Corporation). Tbe Partnership Notes were in 
turn secured by the several obueatniiisontxnrnt^mitmtnn<rrtk.irrut/r'^ M >D-:»_:->'i 



Gu “ oa <c ~* ■**» 





ManufaeturersHaa«Ver' 


Dated: M*y 26, 1987 


New York, N.Y. 10020 

Telephone No. (212) 957-1402 


Si 









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- .■.«*!* 
. v*£ 

=*" ■ ''' 


• Let’s suppose, for a miriuje;;that ypu 
.need- finance. For a management buy-out; Or 
to fund growth. 

'•■ You may well be seriously thinking of 
asking a venture capital company 1 to* h^ip you. 

' But 'you’re, going to’ need to : work; very 
: ; dosely with that company. And , if their attit u de 
is wrong, all sorts of problems can develop. 

Of which the simplest, and' most devas- 
j- tating, is losing control of your company’s 
•future. : 

. At Midland Montagu Ventures, however, 
we believe in taking a rather different approach. 


17 '*• 

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.For instance, you’ll find that our staff 
have extensive business experience themselves. 
Which means that they know business 

j 

goes through good and bad times. 

s'And our people are there to help you 
weather those bad times, offering practical help 
and sympathetic support. 

What’s more, whilst a member 
of our team may have a non-executive 
seat on your board, he has to leave the 
final decisions up to vou. 

After all, we can . only succeed 
if> you’re successful - which won’t 


staff happen it we take over the whole nest. 
:lves. And, if this advertisement doesn’t 

iness persuade you, you can always talk to the 
people in our successful investments, 
you ' The list stretches from Tie Rack to the 

help David Lloyd Indoor Tennis Club. Along the 
. way, we’ve helped to make some very 
talented businessmen into very rich 
businessmen. 

If you’re interested in taking the 
same route, call us soon. 

John Brandon and Alan Marsh 
are waiting for your call on 01-638 8861. 

Midland Montagu \fentures 


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Digest of cases reported 
in Easter Term 


fitevensaii t Wbhart (FT, 

April 29) 

Periodic payments out of the 
capital of a trust fund were 
made to an elderly beneficiary 
to keep her in a nnrrinp homo 
during her terminal illness. 
The Revenue contended- t b»t 


FROHAFRXL 29 TO MAY 22 1887 

changed the legislative source points fa different arMtrxtfoiM refer. the^i«K» to aifatratton 


of inherited laws. 

* 

The River Rim* (FT, May I) 


1 Under section 20 of' . the reference it was. 
Supreme Court Act 1981 an .*, 

action In rem eouldbe founded . • „„ 

on any 41 claim arising out of Davtos v H i m 


so it was reasonable that they «cor®nglr. 

»*»*»» «— * *M« t 

sfan in. some refeaenc» without nfaMSMi i xu Council 

mind trig very much which (FT, May 24) 

sference it was. The present inUatfam by 

* 'Maclaine -Watson A Co Ltd, a 

Darios v EUUDjr * Co and ring dealing member of the 
Mnn (FT, May 12) London Metal Exchange, was for 

t- «*»«•* AHtaM .. appointment of * receiver by 

*""F of equitable execrihm over 
costs ami the selection Of ^*. h . nv> nuinMiMr of 


these sums were inco me and any agreement relating to the 
assessed the trustees to tax carriage of goods in. a ship . 
under section 17 of the Finance Section 20(2) (m) gave the 


Davies v EliLilly & Co and 
Others (FT, May 12) 


under section 17 of the Finance Section 20(2) (m) gave the to costs and the selection of at 

Act 1973. In rejeriing amappeal «"«* Jurisdiction to hear any lead plaintiffs -for the forth- 

against a decision that these clahn in resp ect of goods w coming trial an liability in h« tob* 8 indemnified by dr to 

Si payments ZSZ SSSSMWJEtfK? SS&ittJ&'gS. 
ttxaWe as income, the Court The plaintiffs, arrested the MrJ^ce Him «^Aat Sere 

of Appeal stated that while the River Rima in Liverpool for were L500 plaintiffs with com- SS^rnSL the 

fact that the payments were damages for conversion of coo- man Issues on liability- on all *“• 


race mat me payments wgre 
made out of capital did not 


tafaers 


the ship* the actions; It was 


name of the TTC for the pur- 

prevent their h^gln^e^in owner . 3 ^SL) and for failure necessary to select an appro- 

, Tl i _ . to maintain those containers in nriate ktoud of suitably repTo- JJSr*™* aga uw J**" 

A* ^3 good repair. In allowing NNSL's sStirolSi plaintiffs likely to 5* r S2££ 

fact that payments out of appeal, the Court of Appeal be involved in 10 to 15 lead £“'«¥L,?£S5 JS5f£ JSSS 

capital were periodic or for stated the present leasing agree- cases. In selecting the .lead «”** “" n had raaea to snow 


* - r ***w*», V. w> owicu JUBOIL IWU( OH». JLU aacvuug UIC.lDWi » . *. 

personal maintenance, or both, ment between the parties; while cases the court should he unln- 

did not necessarily mean the? no doubt designed to enable fiuenced by the fact that some JS^^lSS 5 

were mcomfLThere was nothinx NNSL to provide a service .for plaintiffs were l*gallyaided Jfffi JfiLi KffS 

cai*> owners and to enable it andothere were not The court 3™“ **■ apt from . 

wlu<* mdicated that the pay- to handle cargo more easily also accepted the proposal for fatemati° ?alv;T in Agreement, 

ments were c£ -an income nature when it was the carrier, was not equal contributions severally ww jrighfltor cwrceded that 
except their recurrence, which sufficiently directly ■ connected Awn an niainKirc the court could not entertain a 


plaintiffs, legally* 


was Insufflcienti; the trustees with, the operation of ships to aided and non-legally-alded, .up action much was 

were dimnring of capital in hold that the containers were to but not beyond their pro- derived from an international 

exercise of a power over capital. Sf^LSLST JSFttJA 555°^ share S WQtJi- .* 


power i 
★ 


the “operatiim of a 
under section 20(2) (m). 
* 


Butterwerth and Co and * 

Others v Ng Sui Nam; Long- 

man Group Ltd and Another 
v Ng Sui Nam; Royal Aca* 

demy of Musfeand Another «*!»«*»*> (FT, MV 6) 

▼ Ng Sul Nam (FT, May 1) 3“ considering whether the 

Xnre^ana^agatost gf^SST^" 
a decision that the .plaintiff 2LSSL, 


costs not recoverable from, the 
defendants— suhject in-the case’ 
of legally-aided plaintiffs .that 
liability would be limited to a 
"reasonable amount" as stipu- 
lated in section 8<l)(e) of the 
Legal Aid Act 1971. 

* 

Crestar Ltd v Carr and *. 

Another (FT. May 19) 


lured Properties Ltd v Ente 
Nuionde per il Tttrismo (No 
2) (FT, May 22) 

The Italian Tourist Office 
(Enit) in London entered into 
an agreement with Janred Pro- 
perties Ltd for the purchase 
of premises which Janred held 
on an underlease. The agree- 


a decision that me plaintiff ^ awwrnr,«y«i on an underlease. The agree- 

publishers were entitled today- offertoXandon an arbitration constating a Joint Con- ment was signed by Enlt’s 

ages for breach of copyright ^ a dispute which, involved struction Tribunal Minor Works London manager who handed 
tm^r section 1 of the Copy- other charters, the Judge Building Contract; the Court of over a postdated cheque for the 

Act WU for works pub- n instance stated that it Appeal refused to accept the deposit Enit foiled to complete 
^£SL m J? e J 3 *- *>® for ® Ju ^ was unrealistic to answer by builder's submission that the and contended that the agree* 
J ^P 57 from Janurng’ 27 reference to silence and in- Anal certificate could not be re- ment wa* ultra vires because it 
"59 to the present (the “mam activity alone after 1975. opened by an arbitrator after failed to obtain the approval 
decision. ), the High Court : of because of the many coxxtem- the expiration of 14 days from of the Minister of Tourism as 
Singapore stated that the Judge poraneous and relevant deal- the date of the issue of the required under its constitution, 
at first instance rightly con- ings which had fr*frpn place final certificate. While condition In rejecting Enlt's appeal from 


p59 to the present (the “mam activity alone after 1975. opened by an arbitrator after failed to obtain the approval 
decision ), the High Court : of because of the many coxxtem- the expiration of 14 days from of the Minister of Tourism as 
Singapore stated that the Judge poraneous and relevant deal- the date of the issue of the required under its constitution, 
at first, instance rightiy con- which had taken place final certificate. While condition In rejecting Enit's appeal from 
sto ned t he phrase “parts of His between the parties. If those 10(iii) of the contract stated a decision that it was estopped 
Majesty's dominions to_wmcn other dealings were into that the sum specified in the from denying that it was bound. 
■Bus Act extends” m section l account; then the overall pic- final certificate should after Id the Court of Appeal stated that 
as a geographical expression ture was one of uncertainty or days become “a debt payable." the agreement, without minis- 

identifying all countries geo- muddle, and no dear or un- the arbitration clause, in condi- terial consent, was not a total 

graphiou^ foiling within those equivocal statement of the tion . 15, 1 of tile contract con- nullity under Italian law but 

words. This Acr continued to owners' intention could be said tataed no limitation in time. To was capable of ratification. 


mean “this 1911 Act" which re- to have emerged. In dismissing hold, therefore, that after 14 
m a ine d as pa rt of the law of 'the charterers’ appeal, the days an incontestable and non- 
Singapore. There was no prin- Court of Appeal stated that arbitrable debt arose would be 
cxple or authority which sup- there was no flaw in the judge's quite contrary to the structure 
ported the view that the at- conclusion. . The owners were mid intent of the contract, and 
fainmen t of independence reluctant to litigate the- same* »'ti*e defendants were to 


therefore, that after 14 Enit's subsequent behaviour 
an incontestable and non- was such as to lead Janred to 
able debt arose would be suppose, to its detriment, that 
contrary to the structure completion would take place, 
ntent of the contract, and 

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10 


Financial Times- Tuesday May 2 S 1987 


UK NEWS - THE GENERAL ELECTION 


Labour’s opponents step 
up salvoes on defence 


BY MICHAEL CASSELL AND PETER RIDDELL 


LABOUR’S political opponents 
yesterday stepped up their 
attack on its non-nuclear de- 
fence strategy in the conviction 
that it remains one of the 
party’s biggest potential vote- 
losers. 

Strategists within the Labour 
camp introduced die argument 
over defence early in the cam- 
paign, hoping that it would 
quickly be overtaken by the de- 
bate on other policy areas 
where its proposals are prov- 
ing more popular. But both the 
Tories and the Alliance yester- 
day served notice that they in- 
tend to keep the issue close to 
the top of the political agenda. 

Sirs Margaret Thatcher, re- 
sponding to apparent sugges- 
tions from Mr Neil Kinnock. 
the Labour leader, that he 
would prefer organised resist- 
ance to fighting an aH-out 
nuclear war. said the public 
would not trust a party pre- 
pared to surrender its nuclear 
weapons and substitute “some 
kind of guerrilla band for 
them.” 

Speaking in the east Midlands, 
she said the security of Britain 
and of Nato had depended on 
an effective, nuclear deterrent 
but that Labour's approach 
appeared to involve "a policy 
of surrender.” She added: “ You 
cannot have guerrillas until you 
have been occupied.” 

Mr George Younger, the 
Defence Secretary, speaking in 
Ayr last night, said: “I don’t 
know whether Mr Kxrmock’s 
freedom fighters would frighten 
the enemy, but by God they 
frighten me.” 


Mr Michael Hesiltine, the 
fanner Defence Secretary, 
added to the barrage of criti- 
cism, arguing that Labour's 
defence stand was “contempt- 
uous and immoral ” and meant 
Britain would become America's 
feeblest ally. 

He said that Labour’s pro- 
posals would threaten Nato 
stability and endanger Europe’s 
commitment to its own defence. 
In terms of the future evolu- 
tion of Europe, West Germany 
would draw closer to Franc, 
which would be left as the only 
nuclear power in Europe. 

Mr Heseltine. who said that 
Labour defence plans spelled 
“ risk, uncertainty and danger ” 
went on to attack Alliance 
defence strategy, which he 
claimed was variable and chang- 
ing. He maintained that the 
Alliance could not agree on 
defence policy and said the 
fundamental division was be- 
tween Dr David Owen, the SDP 
leader, “who believes in the 
essence of a nuclear defence 
policy and the Liberals who will 
not agree to any specific policy 
of deterrents. 

Taking on Dr Owen directly, 
he said the SDP leader was in- 
consistent In his view of 
Trident since he bad suggested 
a French ballistic system in its 
place, which might be as 
expensive. 

Mr HeseMne argued that 
“the opposition policies sub- 
stitute rheta tic designed to 
defend Messrs Kinnock, Owen 
and Steel from the interna] 
threats they face from within 
their own parties.” Their 


policies, he added, were 
designed to fiht private, internal 
wars and not to prevent Britain 
becoming involved in a real 
war against a real aggressor. 

Dr Owen yesterday also 
attacked Mr Kinnock’s 
" guerrilla warfare ” proposals, 
adding: " We wants Dad’s army 
back and Captain Mainwaring’s 
return to the colours. Or does 
his confidence stem from his 
own, extensive experience of 
fifth columnists in the Labour 
Party?” 

Dr Owen said defence was 
one policy area where Labour’s 
packaging could not hide a 
“ left-wing lurch ” which would 
transform the party in the next 
parliament. Sir Kinnock, he 
suggested, would not find it 
difficult “ to revert to type and 
shed his ill-fitting mantle of 
moderation.” 

He gave a warning that 
unilateral disarmament would 
devastate Britain’s relationship 
with the US and destroy the 
unity and coherence of Nato. Mr 
Kinnock, he claimed, was trying 
to discount reports that the US 
would take him at his word and 
promptly its nuclear bases 
from Britain. But he warned 
that, if Labour was voted into 
power, the Americans would 
quickly withdraw. 

He added: “They will shake 
their head in amazement that 
we can voluntarily emasculate 
the British lion out as good 
democrats they will accept the 
verdict and move out of Britain, 
leaving us to look after our- 
selves as a toothless, shorn and 
neutered lion.” 


Tories leave 
farmers in 
‘state of 
paralysis’ 

Rnandal Timas Reporter 

THE CONSERVATIVES had 
left Britain’s farms in crisis, 
Mr Brynmor John, Labour’s 
agriculture spokesman, said 
yesterday. 

He claimed that the Tories 
bad spent eight yean giving 
conflicting signals to fanners, 
putting them in a “state of 
grand indecision and paraly- 
sis." 

Speaking to fanners at 
Welshpool, Powys, he said that 
Mr Michael Joplin g, the Agri- 
culture Minis ter, had failed to 
reform the Common Agricul- 
tural Policy and had given 
British farmers no sense of 
direction. 

Rifkind warning 
on Scottish rates 

MR MALCOLLM RIFKIND, the 
Scottish Secretary, claimed yes- 
terday that the return of a 
Labour Government would lead 
to the doubling of rates In Scot- 
land within the next two years. 

“ It would also mean the end 
of all protection for both the 
domestic ratepayer and the 
business ratepayer. It is a 
frightening prospect” 

Alliance prison 
proposals ‘laughable 5 

ALLIANCE proposals for solv- 
ing prison overcrowding were 
“ laughable,” Mr Douglas Hurd, 
the Home Secretary, said yes- 
terday. 



Back 


A * hfKf 

school: Mrs Thatcher with Mr John Higginbotham, headmaster of Leieeae* 
Grammar School 


Dobson says Tories 
may ration NHS care 


Lawson sees 
no case for 


Thatcher’s silent old dependables 


THE Conservative Party has 
been seeking to make a virtue 
out of its claim that it is 
beginning Its election cam- 
paign late. Perhaps it will 
begin today when His 
Thatcher makes a speech in 
Wales attacking what she 
calls Labour’s iceberg mani- 
festo — "iceberg” because it 
conceals so moth more than 
It shows. 

Perhaps not. For the Con- 
servative performance so tor 
has been a series of false 
starts. The gaffes have been, 
for the most part, little ones; 
yet they do add up. The party 
does not look entirely happy 
with itself: nor is it certain 
that each member of the Cabi- 
net knows what the others are 
doing. 

There was the disagreement, 
for example, over what the 
Tory manifesto proposals on 
education really mean. How 
far is there to be a return to 
direct grant schools, selection 
and fee-paying? The answers 
are still not clear. Hr Ken- 
neth Baker the Education Sec- 
retary, has looked unusually 
uncomfortable on television, 
while Mrs Thatcher has pro- 
duced responses of her own. 

Something similar happened 
on unemployment over the 
weekend. Lord Young, the 
Employment Secretary, said 


on television cm Sunday that 
he believed that it would con- 
tinue to fall hF around 25,000 
a month. Chancellor Nigel 
Lawson declined to back him 
up with anything like such 
precision at yesterday's press 
conference. 

The examples could be mul- 
tiplied. Hr Norman Tebbit, 
the party chairman, always 


Malcolm Rutherford 
offers a personal 
view of a troubled 
week for the Tories 


seems to be bickering with 
someone. Mrs Thatcher her- 
self has retreated from say- 
ing that she was looking for- 
ward to a fourth term before 
the campaign began to the 
more modest proposal that 
she wQi review the position 
half-way through the third, if 
she gets it 

Two explanations may be 
offered for this faltering 
approach. The first is that the 
party leadership has not 
really decided whether it is 
campaigning on a radical 
manifesto or whether it is 
simply offering more of the 
same. The second is that 
some of the tensions between 


Mrs Thatcher and the rest of 
her team have still not worked 
themselves out. 

The manifesto is radical on 
bousing and education poli- 
cies, but radical elsewhere 
only In the sense that over 
10 yean of Mrs Thatcher 
would add up to a pretty big 
change. The result la that 
ministers are none too sure 
which element to stress: the 
radical or what the almost 
forgotten Hr John Biffen 
would call the consoUdtionist. 

Ministers not too well up 
on the intricacies of housing; 
education and the Ion! auth- 
orities are liable to find them- 
selves in trouble — as well as 
some of those who should 
know better. 

Mrs Thatcher dominates the 
Tory campaign, but insists 
that she has an array of 
ministers alongside her at the 
press conferences almost like 
a row of dummies. It la not 
so much that she is bossy; 
she behaves like a leading 
lady trying to get the best 
out of her cast. 

Yet the stage is not fitted 
for that It is overcrowded. 
They cannot contradict her; 
she can contradict them and 
sometimes almost does. 

Yesterday she took a ques- 
tion away from Chancellor 
Lawson and gave it to Mr 
Nicholas LyeD. a junior 


minister at the Department of 
Health and Social Security 
who must now fancy hta 
chances of promotion if she 
is re-elected. 

Besides, some of the Tory 
stars are missing. Hr 
Michael Heseltine, out of the 
Cabinet, is away campaign- 
ing energetically an his own. 
Hr Peter Walker, still In the 
Cabinet when last heard of, 
is not given platform promi- 
nence. Mr Biffen appears to 
be in disgrace. 

Even some of the old 
dependables seem to have 
been reduced to silence. 
There would be something to 
be said for an outline of 
British foreign policy by. Sir 
Geoffrey Howe who, -after 
ad, has been Foreign Sec- 
retary for the last four yean 
and has not a bad record. 
He Is sometimes there, but 
rarely heard. 

What it all looks like Is a 
pasty still ruled by Mrs 
Thatcher. . There may be 
another dmger: she Is 

preaching too much to the 
converted and relying too 
much on stock themes like 
defence. 

President de Gaulle got 
away with that, but not for 
ever. The Tory campaign . so 
tor "has been less effective 
titan it Should have been. 


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New issue 


Tills announcement appear? os a matter el record erty. 


May 25, 1937 


BY USA WOOD 

HR FRANK DOBSON, Labour’s 
health spokesman, warned 
yesterday that a future Con- 
servative government might 
ration health care for the 
elderly and disabled. 

Mr Dobson, speaking at a 
press conference in London, 

suggested that the Conserva- 
tives planned a syste mwhere 
health care was provided “not 
for those in the greatest need, 
bat for those the Government 
thought useful." 

He was referring to what 
health economists call “ quality 
adjusted life years,” which are 
used to judge the costs of treat- 
ment against the benefit in 
terms of additional years for 
the patient. 

Such a system coul dhave 
some limited use. Mr Dobson 
said. Bu tit posed a dangerous 
threat to pensioners* rights to 
treatment in the context of re- 
marks said to have been made 
by Mrs Edwina Currie, the 
junior Health Minister. 

Mrs Currie last year was. 
quoted in a newspaper as 
sympathising with a two-tier 
priority list, with waiting lists 
graded according to age so 
younger people would get 
priority. 

Mr Dobson said: “We will 
see a health divide in which 
pensioners who landed on the 
Normandy beaches on D-Day 
would have to give up their 
places in the queue tor a hip 
replacement operation to a 
merchant banker— always pre- 
suming the banker didn’t go 
private.” 

He said he had no evidence 
that the Conservatives were 
proposing such a system, but 
many of Mrs Thatcher’s 


advisers subscribed to such a 
viewpoint and they were people 
who would become increasingly 
influential. 

Mr Dobson said the Tories 
knew the people iff Britain 
feared for the future of the 
Nattiona] Health Service. “That 
is why they have kept under 
wraps the tor right’s idea of 
charges for visiting the doctor 
or for staying in hospital,” he 
claimed. 

The NHS, he said, was an 
area where useful new jobs 
could be created. “You feed 
tthe money in and the jobs 
come out at the other end.” 

Mr Michael Meacher, Labour’s 
shadow Social Services Secre- 
tary, said in Newcastle that a 
Labour government would 
crack down on doctors who did 
not perform enough operations. 
Poor performers, he suggested, 
could be putting their NHS 
contracts at risk. 

Dr David Owen, the SDP 
Header, said patients should be 
able to “ shop around ” for hos- 
pital treatment to avoid high 
waiting lists and to farce doc- 
tors to become more efficient 

Speaking in Glossop, Derby- 
shire, he elaborated on SDP 
policy to allow patients to seek 
treatments from another health 
authority, which would be paid 
for by the patient’s own health 
authority. He said the financial- 
incentive was- then on- that 
authorify.' to cut Its waiting list. 

By comparison, he said, the 
Conservative tackled waiting 
lists by rewarding health 
authorities with large queues 
for treatment at a cost of 
penalising those that had suc- 
ceeded in lowering thetirs. 


ending 

By Peter Ridded, PeOtkal Editor 

CAPITAL gains tax would not 
be abolished under a re-elected 
Conservative government, Mr 
Nigel Lawson, the Chancellor of 
the Exchequer, has made plain. 

Mr Lawson said he was not 
persuaded of the case for the 
abolition of capital gains tax. 
This was because of the possi- 
bility of transfers between 
capital and income. Hence, 
there might be a loss of revenue 
from not only, capital gains tax 
but also from Income tax. This 
would o cc u r if capital gams tax 
was abilshed and people sought 
to escape income tax by taking 
their profits in the form of 

Cfliptal 

Mr lawson repeated his 
support for further reforms of 
the tax system without being 
specific. 

On the issue of possible cuts 
in tii higher rates of income tax, 
he said that these would have 
to .be considered is the light 
of the US proposals to reduce 
Its top marginal rate to 28 per 
cent. It is 60 per cent in Bri- 
tain. 

Mr Lawson said that the 
Government would have to see 
whether further changes were 
necessary in terms of business 
decisions and the possible 
“brain drain” of executives. 

' The Chancellor noted that, 
following the earlier reductions 
in tiie top marginal rates of tax. 
the higher income bands were 
paying a larger proportion of 
the total tax take than in 1970. 
Similarly, capital taxes were 
greater in real terms than in 
1979. 


Grammar 
schools win 
Thatcher’s 
top marks 

By John Hunt 

wv»g THATCHER took the 
election battle U^waqdaal 
territory hr the East Mid- 
lands yesterday, where »e 
rhapsodised over the virtues 
of independent grammar 
schools «nd made a fierce 
attack on Hr Neft Kinnock. 
the Labour leader, far Us 
latest remarks on nudes r 
defence policy. 

The omtimight on Hr 
Kinnock came at East Mid- 
lands Airport when she 
addressed a group of *««I 

Tory candidate*. tndudtajE 
Mm Edwina Currie, junior 
Health Minister, who to again 
contesting Derbyshire South, 
one eftihe safer seats, where 
a be has a majority of 1*11 
Mrs Thatcher urged the 
candidates to concentrate on 
defence policy over the next 
few dayr campaigning- She 
criticised Hr Kinnock’s 
implied suggestion that a 
guerriHa deteCce force might 
bo set up in Britain to lead 
x eslstancf i against an occupy- 
ing power, presumably the 
Soviet Union. 

The Prime Minister then 
travelled to Leicester 
Grammar School, on indepen- 
dent fee-paying school in the 
Leicester South constituency 
of Hr Derek Spencer, who 
won it for the Tories at the 
lost general election with a 
m aj ority Of seven over Labour 
«— the lowest hi the country. 

There was a noisy demon- 
stration outside by members 
of various hard-left minority 
parties with chants of “Tory 
scum!” But inside the school 
Mrs Thatcher was greeted by- 
pupils who had been called 
In for the bank holiday and 
promised a day off in lieu 
later in the week. 

Mrs Thatcher, before pull- 
ing aside a blue curtalnto 
open a new wing of the 
school which charges £550 a 
term praised such grammar 
schools which, she said, re- 
presented all “that is best 
of oar national life.” 

Noting that it was a 
church foundation school, 
she applauded the standards 
of discipline and morality in- 
culcated by such institutions 
and made celar that others 
should follow this example. 

She then launched into a 
counterattack against labour 
over its criticism of her re- 
cent remarks on education 
policy. Tory proposals would, 
she Insisted, give a greater 
Agree of choice, particularly 
In inner city areas which 
were controlled by the 
Labour Party, including a 
large number of people of 
tiie extreme left. 

Pupils and parents are 
trapped In these schools,” 


THE ISSUES: ECONOMIC POLICY 


Approaches share cautious theme 


BY PHILIP STEPHENS, ECONOMICS CORRESPONDENT 

• The Conservative Govern- 
ment will continue to put the 
conquest of inflation as our first 
objective, we will not be con- 
tent until we have stable prices, 
with inflation eradicated alto- 
gether. 

• We (Labour) wiU reduce un- 
employment by lm in two pears 
as the first instalment in beat- 
top wars unemployment 

• The Alliance is prepared to 
take the difficult steps neces- 


\ry to create jobs and control 
■flation at 


the same time. 


THOSE looking tor radicalism 
in the economic platforms of 
the three main parties will be 
disappointed. But there are still 
plenty of contrasts. 

The central election promise 
of the Conservatives is more 
of the same — the eventual 
elimination of inflation, a fur- 
ther five years of steady econo- 
mic growth, another round of 
tax cuts, more privatisation, still 
greater deregulation. 

For Labour, the key objec- 
tive remains as in 1983, but the 
ambitions have been trimmed. 
Though a target of taking lm 
off the jobless register within 
two years is hardly modest, 
tiiis time the party sets a firm 
ceiling on the available 
resources. The commitment to 
renationalisation has been 
softened; there is a 
emphasis on prudence. 

As in many other areas, tiie 
Alliance manifesto promises to 
combine “the best” of the 
other parties' policies. Un- 
employment will be cut— by lm 
over three years — but inflation 
will be controlled by taking 
sterling into the European 
Monetary System and by a tax- 
based incomes policy. 

The one facet of policy on 
which all parties appear to 
agree Is that, whoever wins on 
June 1L, there can be no dash 
tor much faster economic 
growth. A deteriorating inter- 
national economic outlook, the 
experience of the Mitterrand 
Government in the early 1980s 
and the recent move into deficit 
on the current account mean 
that the emphasis is os caution 
rather than radicalism. 

The starting points of the 
parties' policies, however, could 
not be further apart 

For Mr Nigel Lawson, the 
Chancellor of the Exchequer, 
Britain's economy “is stronger 
and sounder than at any time 
since the war." This year will 
mark the seventh successive 
year of steady economic 


35 

sss; 

IT* 



Inflation 

3-0 

f 


fl 



f 

“i 

fl 


I 

J 

1 


I (UkDubM, 
1 Inducing 
I actaol 
I bants) 


l A 

>5, 

Unemployment 
i i i i i i i » 


1 1 1 1 1 1 1 1 

| W78 81 83 OS 07 

| 1879 81 83 89 671 


115 


1101 


105 



100 


W® 81 U 85 67 


growth; inflation is low and set 
to toll further; unemployment 
has turned down. 

Living standards are rising 
strongly, last year’s controlled 


has jumped to near the top of 
the international! league in 
terms of productivity growth. 
The Conservative strategy Is 

thus to “build on success” 

to push ahead with cuts in the 
baric rate of tax and. probably, 
the top rates, to improve further 
nev the supply side of tiie economy 
with c urbs on union power and 
more , privatisation and to nur- 
ture the "enterprise culture” 
that has at last emerged. 

The question the Conserva- 
tives were putting to the British 
people, Ur Lawson said yester- 
day, was: “Are you prepared 
to throw all that away on a 
single day?” 

It Is hard to dispute the 


particularly in the area of 
privatisation. In one area it has 
stolen Mr Lawson's clothes. 
While the Chancellor has given 
only a vague commitment to 
toll membership of the EMS, 
the Alliance indicates that such 
a step would be central to its 
contrqi of inflation. 

The. impact on prices of the 
Alliance plans for a targeted 
increase in investment and out- 
put wiU be limited, if necessary, 
by a counter-inflation tax on 
employers who conceded infla- 
tionary pay awards. The Govern- 
ment’s tax cuts will not neces- 
sarily be reversed, but any 
futme scope wiU be used in- 
stead for public Spending, 

A combination of more spend- 
ing on construction and invest- 
ment. a crash programme of 
retraining and extra jobs in 
health and social services would 
cut the dole queues by lm in 
three years. 

Assessing the likely impact 
on the economy of the three 
platforms is fraught with diffi- 
culties, but a study to be pub- 
lished later this week by the 
London Business School gives 
some clues. 

It suggests that the Conserva- 
tive would get the rate of in- 
flation down to below 3 per 
cent by 1992 and keep the 
cimrent account in roubh 

— „ ^ balance, but they would not be 

additional. spending from feed- « maintain anything like 
ing directly through to higher recent rate of decline in un- 
inflation through rigorous con- WPWyment. Even assuming 
trol of public sector pay and that the basic rate of income 
voluntary restraint in tiie public t®? is cut to 25p in 1988, some 
sector. 2.7m people would be imen£ 

Mr Roy Hattersley, the five years’ time. 

to 


two-pronged strategy. The first 
priority is to get unemployment 
down to 2m with a series of 
job-creation measures ranging 

.- , from investment in housing, 

P® 11 " 1 ^Vitals and schools and cute 
has tnggerod a rev ival in man u- in employers’ national insurance 
f securing industry and Britain contributions. 


The second thrust would 
focus on the revitalisation of 
manufacturing industry, with 
the creation of an Industrial 
Investments Bank funded from 
a capital repatriations scheme 
and the establishment of - a 
ministry of science and tech- 
nology. 

In parallel, a Labour govem- 
mmst would seek to prevent the 


i»y Hattersley. the 1 — y .v . years time, 
shadow Chancellor, insists that a commitment 


to uispiue tiie It „ nuuu max w 

buoyant short-term outlook, St overall cpstof its short-tenn ®J e dole queues by lm 

the opposition parties’ assess- J^sramme te £6bn annually for ¥ Plausible, but over 

ment of the underlying stare S e -J oli ^ cre ? tio “ “wstires and JP*** rather than 


^ uMUMijing Blare M et,_ tw o T n nrt •* *Y 

of. tiie economy paints a very * 3 ~ 5 ° n * or anti-poverty pro- rjETT* 0 ® ®t the expense of a 
different picture. Their case is A^but £3bn of that currenl account deficit 

♦v«* nr, would be financed through . “ ter years and a temporary 

reversing the 2p cut in income in inflation to 7 per 

tax announced in the Budget ce 2£. 
and by raising an extra £!5bn "i?® 2 * public spending 

in takes from the richest 5 per £ J 6bn higher than 

25? ft ?fw C ? nsemiivw * but 

That estimate is greeted with bn™I*ri!L the 1 *TlP a 5 t on Public 

more imports from Britain's derision by the Conservatives offset by 

rivals. North Sea oil revenues who have Wed lS?s pS SmJS**?** ^venues r l 


that Ur Lawson has indeed en- 
gineered a temporary boom, but 
at the expense of the long-term 
health of the economy. 

The cost of the consumer 
spending surge has been slug- 
gish investment at home and 
more imports from Britain's 


have been squandered as a £4bn 


— gramme at £S5bn. In one ofhte higher employ- 

surplus on manufactured trade more colourful phrases Mr growth, 

has teen translated into an £Sbn Lawson insisted yesterday that aim , plans would 

deficit. Above alL the Gotiserva- the result would thus be “infla- of thelr central aim 

live clahn of economic success tion going through the roof v™ '“^ployment to 

is belied by an unemployment again and the pound going down hiizher \nfi2f at th ? exw*** 
total of over 3m and its refusal the plughole” B B fl0Wa S r infiatl o& and a deterior- 
to forecast by how much is will The Alliance has emphasis Cl i rrent account. The 

^Sl***^**^ that It seas muchwoS?^ 

For Labour, the answer tea ing in the Coiteerativ* legacy, und^a^}®* wouW *» 






& 


Financial Times Tues 


May 26 1987 

/ 




UK NEWS - THE GENERAL ELECTION 


Labour aid Alliance keep 
up attack on education 


BY FIONA THOMPSON 

BOTH Labour and the AUiazy 
refused to let toe educate 
issue drop yesterday despitfa 
weekend of backtracking byie 
Conservatives. 

The Alliance attacked wy 
proposals to allow schools topt 
out of local authority c*troI 

as a step backwards and a <dpe 
for bureaucratic shambl* 

Mr Bryan Gould, i>our*s 
campaign co-ordinator,'. ®®ted 
in spite of denials over 1 ® past 
two days, that a re-deed Tory 
government might Produce 
fees in state schools wPh opted 
out 

The ’ Government 85 m . a 
considerable muddb ove ? l lts 
education proposals’; 36 earn a * 
Labour's morning confer- 
ence yesterday. 

“The Prime -“^ster is 
rather like a tablet that has 
got her claws in'" a p iec ® of 
knitting. Every she pulls 
a claw out ano® r piece un- 
ravels. 


“Despite the efforts made by 
the Education Secretary. Mr 
Kenneth Baker, and others to 
damp down the Prime Minis- 
ter's revelation that she does 
contemplate the charging of 
fees in state schools, the Prime 
Minister cannot conceal that 
this is., implicit in her view of 
what is going to happen to our 
state education system,” he 
said; Mr Paddy Ashdown, the 
Alliance education spokesman, 
said the plans were “ a deli- 
berate act of demolition of our 
education system which we 
have spent 40 years carefully 
painfully; putting together.” 

They would produce divided 
schools for -a divided nation, 
schools for. the chosen and 
schools for the trapped. 

The proposals “ were not 
radical, but de stru c tive , ” he 
said. They would take British 
national education back half a 
century and more, back to the 
days of selection and inequality. 


Peff who offers stark choices 
anl belies his political calling 


Lord Yeas’® practical poli- 
tical philo'Phy can be summed 
up succmly- 

People'! efer to, and should, 
stand oo^ic 0WI1 feet and take 
responsibly for themselves. 
For tho with drive, ability and 
re sour* government merely 
create&e conditions for them 
to en? independence. 

Bugovermnent has an obli- 
gatfoto help the less fortunate. 
Sucps or failure here should 
b e • easured by how far the 
stat hands them responsibility 
foj-heir lives. The state should 
f 0f ;r choice within public 
sebr housing and education 
rfier than creating dependency 
o state handouts. • 

The message 4s delivered with 
; sun-tanned confidence, which 
,‘rges on serenity when con- 
rasted to the mayhem of Con- 
.ervative Party Central Office 
moving into battle. Lord Young, 
sitting in a bare office, says he 
is helping opt with the general 
campaign as he has no con- 
stituency to fight 
He will advise the Prime 
Minister tat he has not been 
moved in- to Qiooth over Mr 
Norman Ttobifs rougher edges. 
" We hava known onp another a 

long ti rap and get on very well," 
he says, . j - - • - 

In a -country which is still 
suspicion of politicians. Lord 
Young his a tremendous asset: 
he is abb to appear not to be a 
politician at all. 

Whereas colleagues and 

counterparts bear the marks of 
arduous climbs up the greasy 
pole. Loot Young arrived at the 
top aftei a career in industry. 
He is pleased, almost surprised, 
at being in a position, of power. 
It seem; more than an attrac- 
tive ploy designed to identify 
him as at ordinary industrialist 
who endfd up as Employment 
Socreftarj almost by accident 
His inmensely practical view 
that potties is about getting 
things dfee leads him a detach- 
ment frtin tie messy process 
of reconciling different interests 


and soothing constituencies. His 
very practicality seems to float 
him above politics. 

The Conservatives are pre- 
senting tiie election as a water- 
shed. They are asking the 
public, to reject emphatically 
the drab world of social 
democracy, which is infested by 
residual beliefs in the power 
of the overshadowing state, run 
by planners intent on lumping 
individuals ‘ into anonymous 
collectives. 

Ahead lies the world of enter- 
prise, which is as much a way 
for individuals to exercise con- 
trol over their lives as tt Is an 
economic necessity. Lord Young 
says tiie vision will be deepened 
and broadened in the third 
term. 

“Hie first parliament was 
about whether the country was 
governable. In the second the 
task was to get the economy 


Charles Leadbeater 
on the career 
and priorities 
of Lord Young 


right In the third we can start 
using that economic ' strength! 
to tackle social braes,” be says. 

He highlights the manifesto 
commitments to give council 
tenants the power to choose 
another landlord if the council 
is performing poorly; to allow 
greater choice within the state 
education system and to give 
three fresh training guarantees 
to . groups of unemployed 
workers. 

"While he says the Govern- 
ment has always acted for the 
whole of Bodety. he recognises 
the party must make it dear 
that it is not creating a world 
designed only for go-getters. “ I 
want a balanced society — with 
wealth creation and wealth con- 
sumption going hand in hand.” 

If Europe had the dynamism 


of the American economy we 
would have millions more jobs, 
but America is too cruel a 
society, he says. Nevertheless 
they do have a whole tier of 
low-paid jobs which do not exist 
in this country because of the 
tax and benefit system. 

However, the Conservatives 
cannot be seen to urge, nor do 
they want, a low-wage economy. 
Lord Young wants a high-wage, 
high-productivity economy. Does 
not that conflict with the 
Government's previous insist- 
ence that real wage moderation 
was the route to lower un- 
employment ? 

“ I have never said that, but 
I cannot speak for my col- 
leagues” he remarks. 

Lord Young believes Britain 
can return to full employment, 
although he considers that in 
the post-war era the country 
succumbed to a myth that un- 
employment could be kept to 
3 per cent But he is also im- 
pressed by the writings of Wil- 
liam Beveridge, the founder of 
the welfare state, who, he says, 
thought 8 per cent unemploy- 
ment was a natural rate. 

Can a gover nm ent which says 
it has little control over the 
real economy of jobs and out- 
put really claim credit for 
growth which has been pro- 
duced by strenuous efforts on 
the shopfloor and in board- 
rooms? “No one else would 
have created the conditions for 
growth. Would the CBI have 
done it? They were the biggest 
load of wets I have ever seen,” 

The comment raises another 
question over Lord Young's ap- 
proach to politics and the cam- 
paign. His absolute belief in 
tiie rightness of bis approach, 
combined with his background 
as a business executive used 
to getting his own way, pro- 
duces an apparent intolerance 
for argument His charm masks 
stark choices: you are either 
right or wrong; one of us or 
not one of us—there is no third 
way. 


Clristopher Dunkley on the television campaigns 

Parties box differently 


THIS TliE, they tell us, this 
time it if going to be the tele- 
vision eiption. To which every- 
one overthe age of 17 replies: 
“So whafe new?” 

Televion presenters nave 
been cllming that television 
exerts tfe most crucial influence 
in eleepns for 20, or SO years. 
But dhs anybody seriously 
imagin/that any flection result 
since H5 would- actually have 
been efferent if- television had 
not befo with usf 
Tension's main effects are 
reinf element _ (of existing 


wrlgHng 


reuuocwucui- vj- f ~TT~z 

attituis), revelation (of true 
charier, whether toe poU- 
eian’s «r toe viewer's) and, 
unhapily, the imposition or a 
eertai cosmetic uniformity. ; 

1'uc was when tiie Labour 
Pare was represented by a nice 
old .“hap in a donkey Jacket and 
wn-ky glasses who livea jo 
KL elHnd looked life a 

vegetarian . The Conseratires 
ued no be led by a bald mrf 
«ao wore half-moon spectacles 
ad looked as though be Was 
uerpetually longing to get b*ek 
■.o toe grouse moors. vTM 
Liberals had at tbdr bed an 
eccentric who sported a. diuWe- 
bressted waistcoat and an oub 
moded trilby. .... 

Today toe parties stead 
for the Interests 
symbolised by those chawrtare 
but. thanks to the pohiolan^ 
belief that the television image 
Is crucial, all parties dress up 
their representatives m identi- 
cal merchant banker oumtA 
■Hie ouly difleren* is that 
the Tories buy dark 

chalk-stripe suits inaavfle Row 

The 

M and S but lowly refuses to 
discuss the subset, cla i ming 
to be above suchpetty matters- 
This supeKdUus attitude of 
on a «ine superior to 


toe small screen, this has been 
something of a surprise, and 
perhaps the most important 
aspect of the television cam- 
paign so far. 

In tine past Britain’s centre 
party has gained by distancing 
Itself from its competitors: 
“We hate politicians too! A 
plague on both their houses! 
We’re on your tide,” they said 
to the viewers, and very 
endearing it seemed. 

But it only worked so long 
as it was clear that segment 
really was as remote from the 
centre of political .power as the 
rest of us. Now that it is repre- 
sented by such archetypal 
political bruisers as David 
Owen, and given equal time 
and facilities with the others, 
their pose simply looks toffee- 
nosed. There is not much charm 
any longer in the claim that 
the “ Yah-boo " politics of 
Labour and Conservatives is 
out of date and that the smart 
thin g to do is face both ways 
at once and say “Yah-boo" 
twice. 

Furthermore, whereas the 
centre party used to gain in 
toe three-way Party Election 
Broadcast fight by appearing 
neither as odiously slick as the 
Conservatives nor as pitiably 
inept as the Socialists, bat to 
be instead by quiet 

men sense, they have blown 
common sense, they have 
blown it this time . 

Judging from a long week- 
end spent with Rosie Barnes 
in France last month (with 
dozens of others, we were 
guests of London Weekend TV) 
Mrs Barnes is a nice middie- 
class lady with moderate views 
and bags of common sense. 
Sere enough that was how she 
started to o ome across in last 
week's FEB for the Alliance. 

However, even with a KTOL 
on her throughout , (a soft-focus 
las known in the business by 


oblique angle as Mrs B talked 
and talked to an unseen and 
unheard inte rview er. By com- 
parison the PEBs from both 
Conservative and Labour parties 
were masterpieces of the com- 
mercial maker's art 

This was scarely Burprising in 
toe case of the Saatchi & 
Saatchi party, which predictably 
enough managed to work in the 
Union Jack, the Battle of Bri- 
tain, and toe “Jupiter” move- 
ment from Holst's “Planets” 
suite (“I vow to thee my 
country”) ending with the 
Winter of Discontent 

But toe first Labour broad- 
cast was an eye-opener. The 
party which has poured such 
contempt on the Tories for the 
presidential style of their cam- 
paigns came up themselves with 
a panegyric to Neil Kmnock, toe 
like of which has never been 
seen in this country before. 

The chief ingredients were 
Brahms. Glenys and roses, but 
we also had large chunks of 
the British landscape, and heard 
the leader's praises sung by Us 
aunt and uncle, not to mention 
Barbara Castle. Admittedly the 
best that Denis Healey could 
offer was “I think he’s very like 
Gorbachev in the Soviet Union: 
he’s got a nice smile but steel 
teeth,” but if a man like Healey 
is told be is not allowed to talk 
about anything but The Leader, 
what can you expect? 

At the end of toe first week 
of the television c a m pa i g n toe 
Conservatives have opted for 
Winston Churchill’s clothes, 
Labour has stolen the Conserva- 
tives* clothes, and toe Alliance 
— which used to parade in a 
mixture of hand-me-downs — 
appears to be Tunning around 
half-naked looking anxiously 
for a new tailor. 

Perhaps it is still all to play 

for or perhaps toe reported 

comment from Ken Livings: one 
(and who is keeping him off 

.L. *■ tn Ab 


Tom Lynch on the fight for survival looming ahead of the Trade and Industry Secretary 

Channon camp stirred from seaside slumber 


Dr David Owen, SDP leader 
whose three children are in 
state schools, claimed that this 
Government simply didn’t care 
about the quality of education 
provided in the state system. - 

“They don't send their kids 
there. They don't live among 
people that do. 

“I sit day by day. hour by 
hour, getting angry at what is 
going on In- tiie education 
system. I consider" each night 
should I use the income I have 
to .send my children privately?" 

The Alliance issued a 10-point 
plan for raising .standards in 
education. It includes a re- 
quirement on " all schools to 
publish indicators showing pro- 
gress in. academic results re- 
lated to intake tod social 
conditions. 

Schools will be asked to set 
targets for improvement and 
special inspections will be 
started at all schools which 
regularly fall below a certain 
level in progress achieved. 


THE traditional Bank Holiday 
traffic from east London to. the 
Essex seaside resorts was joined 
this weekend by a new element 
— a stream of journalists on 
their way to take the tempera- 
ture in toe Southend West 
constituency, where a Cabinet 
minister's political survival is 
in question. 

. Mr Patti Channon; ’ the Trade 
and Industry .Secretary, meets 
such callers with a courtesy 
often absent from those defend- 
ing marginal seats. He says 
the speculation about his pos- 
sible demise helps his case, 
since any Tory voter tempted 
to feel complacent is being 
reminded constantly of the 
"importance of coming to the 
aid of the party. 

At first sight, his 8.000 vote 
majority over the Liberals may 
seem comfortable enough, 
especially given tiie poor 
Alliance showing in toe opinion 
polls. However, his 54 per cent 
of the vote in 1883 represents 
a drop of five points and 3,000 
votes on 1979. while the 
Liberals advanced from 25 per 
cent to 38 per cent. Since then 
toe Alliance has all but annihi- 
lated the Tories In toe consti- 
tuency’s seats to take effective 
control of Southend Council. 

The Conservative Party has 
woken from its slumber and 
found the Alliance breathing 
down its neck. A full-time agent 
has been appointed after a gap 
of five years and Mr Channon 
says previously inactive party 
members have been mobilised 
to counter toe Alliance threat. . 

The Liberal campaign has 
been conducted at almost elec- 
tion intensity over several 
years, using all the techniques 
of toe computer age to target 
sections of voters and focusing 
on local issues to the extent 
that threatened closure of one 
hospital unit has emerged as an 
important issue in toe current 
battle. 

A campaign to save the 
cancer treatment centre at 
Southend Hospital culminated 
in a 94,000-signature petition 
and a ruling last week from Mr 
Norman Fowler, the Social 
Services Secretary, of a review 
of toe guidelines on which the 
closure proposals were based. 

This eleventh-hour announce- 
ment is being treated with 
open cynicism by Mr Gavin 
Grant, toe 31-year-old liberal, 
challenger, who claims to have 
initiated toe campaign. If Cie 
guidelines were wrong, he asks, 
why did it take ministers so 
long to say so? : 



Votes in the balance: Paul Channon faces a strong challenge In South West 


Mr Channon sees toe 
announcement as an effective 
answer to critics who say his 
work as a Cabinet minister in- 
hibits his ability to deal with 


local issues. He sees toe issue 
as one on which toe parties are 
united and where be has been 
able to make a special contri- 
bution as a minister. 

Mr Channon hopes that 
another local issue will help 


him. There are four grammar 
schools in toe constituency — 
two for each sex — and he 
sees toe Alliance’s opposition to 
selective education and the 
Tory manifesto proposals to 
allow its extension as a vote- 
winner. “A vote for the Con- 
servatives is a vote for retaining 
our education system.” 

The education question is 
one area where Mr Grant 
deviates from the party line — 
he believes in keeping selective 
schools, though he would like to 
see them reduced in size. 

His views are seen with some 
scepticism by the Labour candi- 
date, Ms Angela Smith, the 28- 
year old political officer of the 
League against Cruel Sports, 
who accuses the Liberals of 
being afraid to acknowledge 
their opposition to grammar 
schools. 

She, like Mr Channon, says 
offers of help are easier to find 
this time. The greater effective- 
ness of the Labour campaign 
and especially the image of Mr 
Neil Kinnock are seen as 


(Advertisement) 




May 1987: VoL 16, No. 5 


REPORT 


Public works needed to boost 
prospects of domestic economy 


Production activities, which sector. Public works contracts Export decline rate slowin g 
had long been stagnant, have have recorded a douUe-ffigit a slow-down in the decrease 
been showing a sl ig h t sign of growth since the start of tins of overseas demand appears to 

recovery. The industrial year. Moreover, the steady support production of export- 

production index has been growth in machinery orders related firms, 

stowing positive year-to-year from the, non-manufacturing iq gpjte of dpriiwiwg export 
growth since the beginning of industries suggests that regular volume to the U.S., decline in 

this year. In acUfitioo, the investments in plant and equip- export volume, as a whole, has 

operating rate is gradually ris- raent are being made. TWs slowed since the s pinning of 

ing in the manufacturing indus- favorable domestic d emand this year, due to tiie following 

try. These factors are seen to seems to be stimulating the seasons. 1) Exports to West 

be attributable to toe slight production of construction Europe have been 

recovery in both overseas and goods and capital goods (ex- the appreciation of the 

domestic d ema nd. duffing transportation equip- yen the currencies of 

Relative to domestic de- meat). In addition, the recent western Europe is not exces- 

mand, a favorable trend is progress in inventory adjust- srve. 2) Japan has b<vn to- 

observed in public investment, raent is believed to be con- f wadng g m yts of 

as well as in capital investment trlbuting to the recovery of pro- and materials to Southeast 

in the non-manufacturing duction activities. Asia, since Southeast Asian na- 

tions are significantly boosting 
their exports of electric ap- 

Trends in Industrial Production 

(Year-to-year % changes) tiveness resulting from cur- 

rency adjustment and low labor 

(X) «■*»• 

Friction on the rise 

Although there have been 
signs of a bottoming -out to tiie 
business climate, whether or 
not this trend will lead to sub- 
startial recovery is ques- 
tionable, as there are major 
areas of concern relative to 
future demand trends. The yen 
exchange rate has, since the 
beginning of March, broken 
into reared levels of ¥140 to the 
dollar. In addition, on March 
27th, the Reagan Administra- 
tion pnn«inw»ri the application 
of hlgx tariffs on the import of 
Japanese-made electronic 
appliances as a- sanction 
against Japanese semi-con- 
ductor exports. Trade frictions 
with West European nations 
also seem to be accelerating. 
There is fear that these un- 
favorable circumstances will 
’result to a renewed decline in 
Japan’s future exports. 

Consmnptiop is lackluster 
4-6 7-9 10-12 1-3 4-B 7-8 10-12 1-2 Another issue of concern is 

■ tg85 i 1966 * k 1987 tort personal consumption, 

which now accounts far 57% of 

■a inn Mtawry di Hnaw Traa« m inouury domestic demand, been 

weakening. Growth remains 

London Branch: 4th & 5tti Floors, P&O Bldg, Leadenhall Street London EC3V 4R\ England 
Tel 01-283-0929 Subsidiary in London: DKB International Limited, Garden House, 18 Finsbury Circus, 
London EC2M 7BP, England TeL 01-920-0181 Associated Companies to London: Associated Japanese 
Bank ( International) Lid, European Brazilian Bank Ltd, International Mexican Bank Ltd 

MnU Offlca: 1-5, Uchsaavaicha 1-choma, CHiycda-ku, "fckyo lOO, Japan Tel (03) 596-1111 BrwichMto:Nevv'iW«.L33AngBte& 
Chfcua Rsama. OHsaelaori. Taipei, Seoul. Setgspon. Hong Kong. Cayman lUpww nf it*h» Offlew teHnWon, San francocft 
Asana.-foiort3.sao PajJa MeacoOty, Cvacaa Buenos Aboa, FrankJuft Pm. Madrid. Sajcknotm, Mteno, Bahrain, Jakana. 

Kktoa ujmpot: Bancm*. BOfflM* Basing. S^nghal, Quangmou, Dated. Sydney. Mettnume MnMarin kc New Marts, b» Angeles. 
Tbrorsa Amsterdam. 2iirich. LDeembcva, Hofig KOrtfl. SOfiapcre, Sydney Aasocietsd Companies in: 3&0 FSuto, BanghoK 
Singapore Kwe lumput Jatena. frunei 


sector. Public works contracts 
have recorded a double-digit 
growth since the start, of tins 
year. Moreover, the steady 
growth m m a chin ery orders 
from the non-manufacturing 
industries suggests that regular 
investments in plant and equip- 
ment are being made. Has 
favorable domestic demand 
seems to be stimulating the 
production of construction 
goods and capital goods (ex- 
duffing transportation equip- 
ment). In addition, the recent 
progress in inventory adjust- 
ment is believed to be con- 
tributing to the recovery of pro- 
duction activities. 


Trends in industrial Production 

(Year-to-year % changes) 


^ witv “Kind To Old Ladies”) the pro- mark: “If Mrs Thatcher is 
anything WB?® deenly gramme became desperately found in bed with a camel three 
iSiSSnu. kvB§dnJ? the tart tedious as toe di recto r went on days before polling, then toe 
Sk o?%ie PW* m and on shooting from toe same Tories will lose. * 



4-8 7-9 10-12 1-3 4-B 7-9 10-12 1-2 
•— 1985 — J 1988 *-1987 

■surer: MtaUtry of intaraKfeMi Trad* m iftounrr 


strengths which have raised 
morale within the party and 
made Labour voters less apolo- 
getic than they were daring the 
gaffes and embarrassments of 
1983. 

Her aim is to get as many 
votes as possible and she sees 
toe 1983 figure of 8 per cent as 
the core Labour vote, which is 

1983 resenlt in Southend 
West: P. Channon (C) 25,360; 
G Grant (Lib/AIl) 18,327; J. 
Nisbet (Lab) 3£75. C Majority 
8,033. Turnout 7L7 per cent. 

unlikely to be squeezed any 
farther. 

The generally comfortable 
appearance of the constituency, 
says Ms Smith, belies some 
genuine hardship. Impressive- 
looking houses are often in 
multi-occupation. Unemploy- 
ment, at 14 per cent, is four 
points above the regional total 
and waiting liiVs for operations 
are long - 


Roger Taylor 

As head of marketing and 
membership for the Council for 
the Protection of Rural England 
and a former campaign director 
of the Liberal Party. Mr Grant 
is no stranger to fighting his 
corner. He is dismissive about 
Ms Smith’s view of a solid 
Labour vote and thinks half of 
it can be squeezed into voting 
tactically for him. He has 
targeted three other sections 
of the community: pensioners, 
the young and new arrivals. 

Mr Channon and his suppor- 
ters know they have a fight on 
their hands, though he insists 
that the Alliance would have to 
convince a large number of 
Tory waverers in order to 
secure victory. It remains to be 
seen wbether the Alliance’s 
four target groups contain 
enough dissatisfied voters to 
take the extraordinary step of 
depriving a Cabinet minister of 
his seat in the Commons. A 
more convincing showing in the 
opinion polls is likely to be 
necessary to convince the 
doubters. 


Number of unemployed persons 

(Year-to-year % growth) 


Ntm-vofuntarify* 


Voluntarily * * 


4-6 7-9 

1986 — 


Notes: •— Forts') from |ob duaTo rscanrt buiinm ctmdliiaftK. 

-—Due » (wnenal or lamli v reasons. 

Source: Monnemem ana coordination Agency 


low in household consumption, 
although recently it has 
recovered somewhat from the 
dramatic drop in December 
last year. 

The deterioration in employ- 
ment, particularly in the manu- 
facturing sector seems to be 
gradually affecting consump- 
tion. Ibe employment situation 
has become severe, with the 
number of wholly unemployed 
having risen to 1.77 million in 
February (seasonally adjust- 
ed), an increase of 210,000 over 
the same month of the previous 
year. Those non-voJuntarily un- 
employed substantially in- 
creased, exceeding the number 
of those voluntarily jobless. 

Employment deterioration is 
extremely severe in the manu- 
facturing sector with the num- 
ber of employed persons drop- 
ping by 430,000 in February. 
Meanwhile, in the same month, 
the non-manufacturing sector 
recorded an Increase of 570,000. 
Consequently, consumption is 
becoming quite sluggish in 
districts relying heavily on 
manufacturing industries. 

If consumption were to 
stagnate in the future due to 
further employment adjust- 
ments along with a declining 
rate of wage increase, it is 
feared that not only the 


favorable non-manufacturing 
sectors, such as service indus- 
tries and retail businesses 
would stagnate, but the manu- 
facturing sector would also 
lose an incentive for recovery. 

Capital investment g loom y 

Recent plans for plant and 
equipment investment by 
major firms in 1987 has raised 
other concerns for the future 
outlook. The manufacturing 
sector appears to continue to- 
wards a large decrease in 1987 
and non-manufacturing indus- 
tries, which recorded high 
growth last year, seem to be 
slowing down. 

This is believed to be the 
result of unstable exchange 
rates and increasing overseas 
trade frictions that are making 
it more difficult for a majority 
erf firms to establish a reliable 
business outlook. 

Govt, most lead wa v 

With the exception of invest- 
ments in bousing and public 
works, the forecast for the 
business climate is not opti- 
mistic for both domestic and 
overseas demand. Consequent- 
ly. in order to realize a stable 
economic recovery, sufficient 
support through governmental 
policies is indispensable. 


Talk it over with DKB. 
The international txxrik 
that listens. 



We have your interests at heart. 

DAI-ICHI KANGYO BANK 

tUETAicpaa 


! 









12 


Fmcuscaikasiw Tuesday May & X88? 


STAR EUROPEAN FINANCE N.V. 

FRF 100 000 000, - 8% - LOAN DUE 1988 

We mfbnn boodhakfcn that the FRF 11 000 000,- redemption instafejent due on June 15th, 1957 was met 
by a draw by lot in - the prese n ce of Madame Jeanne HOU5SE, Notary Public in Luxembourg. 
Considering 2 200 bonds are to be redeemed and the draw mast be made- by senes with a imudmmn of 
5 btmds, the Mowing bonds arc called far re pa y m e nt , coupona at June 15th, 1988 and suhsequentatta- 
efted, w from June I5th, 1987 date at which thtywill cease to bear interest 


3385 

4157 to 4161 
4398 to 4402 
4669 

5243 (0 5247 
6013 to 6017 
6115 

6310 to 6315 
6428 to 6431 
6518 to 6522 
6568 to 6572 
6826 to 6819 
7271 

8258 to 8262 
8308 to 8312 
9612 to 9616 
9704 to 9708 
10189 to 10193 
10866X0 10870 
10916 to 10920 
10966 to 10970 
U227 to 11231 
11335 to 11339 
11385 to 11589 
11819 
12772 
13272 

14062 to 14066 
14910 to 14914 
14959tol4961 
15038 to 15039 
1521310 15217 
15386 1015390 
15940X015944 
16547 to 16551 
16597 to 16601 
16647(016651 
16697 to 1G701 
16901 to 16905 
17011 to 17015 
17061XO17065 
17111 to 17115 
17161 to 17165 
17211 to 17215 
17261to 17265 
17311 to 17315 
17354(0 17358 
17404 to 17408 
17454 to 17458 
17504XO17508 
17554(0 17558 
17604 to 17608 
17654tol7658 
17704 to 17708 
17754X0 17758 
17804 to 17808 
17854(0 17858 
17904 to 17908 
17954 to 17958 
18004 to 18008 
18054 to 18058 
18104 to 18108 
18X54(0 18158 
18204(0 18208 
18254(018258 
18304(0 18308 
18354 to 18358 
18404 to 18408 
18454(0 18458 
18504 to 18508 
18554(0 18558 
18604(018608 
18654 to 18658 
18704 to 18708 
18754X0 18758 
18804tol8808 
18854U 18858 
18921(018925 
18971(018975 
19021(019025 
19071 to 19075 
191211019125 
19171 to 19175 
19221(019225 
19271(019275 
19321(019325 
194210319425 
19471 to 19475 
19521 to 1952S 
19571 to 19575 
196211019625 
19671 to 19675 
19721 (0 19725 
19771 to 19775 


3637 to 3638 
4327 (04331 
4491 

4678 to 4682 
5255 to 5257 
6023 to 6027 
6220 to 6224 
6388 to 6392 
6442 (06446 
6528 to 6532 
6615 to 6616 
6902 to 6905 
B7TH to8222 
8268 to 8272 

smi 

9660 to 9662 
9852 to9856 
10199 10 10203 
10876 to 10879 
10926 to 10930 
10976 to 10980 
11237 to 11241 
11345 to 11349 
11395(0 11399 
11989(011993 
13221 to 13225 
13340X0 13341 
14074 to 14078 
14924 to 14925 
14998 to 15002 
15173 to 15177 
15223(0 15227 
15396X0 15400 
15950X0 15954 
16557(0 16561 
16607 to 16611 
16657 to 36661 
16707(0 16711 
16911 to 16915 
17021X0 17025 
17071 to 17075 
171211017125 
17171 to 17175 
17221(017225 
17271X0 17275 
17321 to 1732S 
27364(0 17368 
17414 to 17418 
17464 to 17468 
17514 to 17518 
17564 to 17568 
17614 to 17618 
17664 to 17668 
17714(0 17718 
17764 to 17768 
17814 to 17818 
17864X0 17868 
17914(0 17918 
17964 to 17968 
18014 to 18018 
18064 to 18068 
18114 to 18118 
18164X0 18168 
18214 to 18218 
18264 to 18268 
18314 to 18318 
18364(0 18368 
18414 to 18418 
18464(018468 
18514 to 18518 
18564tol8568 
18614 to 18618 
186641018668 
18714(018718 
18764(0 18768 
18814 to 18818 
18864 to 18868 
18931X0 18935 
18981X0 18985 
19031(019035 
19081(019085 
191311019135 
19181(019185 
19231X019235 
19281X019285 
19331(019335 
19431(019435 
19481(019485 
19531W19535 
19581 to 19585 
19631X019635 
19681 60 19685 
19731 to 19735 
197811019784 


4127 to 4131 
4337 (04341 
4533 (04537 
4688 to 4692 
5263 to 5267 
6033 to 6035 
6230 (0 6234 
6398 to 6402 
6452 to 6453 
6538 to 6542 
6630 106634 
6911 to6915 
fmx to 8232 
8278 to 8282 
9523 to 9527 
9674 (0 9678 
9862 

10288 to 10292 

10886(010890 
10936tol0940 
10986to 10990 
11247(011251 
11355 to 11359 
11405 to 11406 
11999 to 12001 
13227 
13363 
14396 

14930 (0 14931 
15008(015012 
15183(0 15187 
15233(0 15237 
15406(ol5410 
16054 to 16057 
16567(0 16571 
16617(016621 
16667(0 16671 
16717 to 16721 
16921(016925 
17031 to 17035 
17081(0 17085 
17131 to 17135 
17181 to 17185 
17231tol7235 
1728110 17285 
17331(0 17332 
17374(0 17378 
17424 to 17428 
17474 to 17478 
17524 to 17528 
1757410 15578 
17624 to 17628 
17674 to 17678 
17724(0 17728 
1777410 17778 
17824 to 17828 
17874 to 17878 
17924(0 17928 
17974 to 17978 
18024 to 18028 
18074 to 18078 
18124 to 18128 
18174 to 18178 
18224(0 18228 
18274(0 18278 
18324tol8328 
18 374(018378 
18424(0 18428 
18474 to 18478 
18524 to 18528 
18574 to 18578 
18624(018628 
18674tol8678 
18724(0 18728 
18774 to 18778 
18824 to 18828 
18874 to 18878 
18941 to 18945 
18991(018995 
19041tol9045 
19091 to 19095 
19141 to 19145 
19191(019195 
19241(019245 
19291(019295 
19391 to 19395. 
19441X019445 
19491 to 19495 
19541 to 19545 
19591(019595 
19641 to 19645 
19691tol9695 
19741 to 19745 


4137 to 4141 
4372 to 4376 
4649 to 4653 
5125 

5273 to 5275 
6043 to 6047 
6240 

6408 to 6412 
6471 to 6472 
6548 to 6552 
6640 106644 
6921 to ©25 
8238 to 8242 
S28K u 8292 
9592 to 9596 
9684 to 9688 
10087 to 10091 
10846 to 10850 
10896 to 10900 
10946 to 10950 
11049 » 11053 
11257*011258 
11365 to 11369 
11484 u 11486 
12195 

13253(0 13254 
13850tol3853 
14800(014804 
14935 to 14939 
15018(0 15022 
15193(015197 
15243(0 15247 
15460 to 15464 
16527(016531 
16577 to 16581 
16627 to 16631 
16677(016681 
16727 to 16731 
16991tol6995 
17041 to 17045 
17091 to 17095 
17141 to 17145 
17191 to 17195 
17241 to 17245 
1729110 17295 
17334 to 17338 - 
17384 to 17388 
17434 to 17438 
17484tol7488 
17534 to 17538 
17584 to 17588 
17634 to 17638 
17684(0 17688 
17734 to 17738 
17784 to 17788 
17834tol7838 
17884(0 17888 
17934 to 17938 
17984(0 17988 
18034 to 18038 
18084to 18088 
18134 to 18138 
18184 to 18188 
18234tol8238 
18284(0 18288 
18334(018338 
18384(0 18388 
18434(0 18438 
18484(0 18488 
18534»18538 
18584 to 18588 
18634(018638 
18684tol8688 
18734tol8738 
18784 to 18788 
18834 to 18838 
18901 to 18905 
18951tol89S5 
19001 to 19005 
19051 to 19055 
19101 to 19105 
29251(0 19155 
19201 to 19205 
19251(019255 
19301 to 19305 
19401(0 19405 
19451 to 19455 
19501 to 19505 
19551 to 19555 
19601 to 19605 
19651(019655 
19701 to 19705 
1975110 19755 


4147 to 4151 
4382 104386 
4659 to 4663 
5233 (05237 
6003 to 6007 
6053 to 6057 
6265 to 62® 
6418 10 6422 
6508 106512 
6558 (06562 
6650 to 6654 
6931 to ©34 
8248 to 8252 
8298 to 8302 
9602 to 9606 
9694 to 9698 
10097 to 10101 
10856 to 10S6Q 
10906 to 10910 
10956 to 10960 
11203 to 11206 
11325 to 11329 
11375(0 11379 
11555 to 11556 
12205(012206 
13268(013270 
14030 to 14032 
14897 to 14898 
14945 to 14947 
15028 to 15032 
15203(015207 
15253(0 15257 
15470 to 15474 
16537 to 16541 
16587 to 16591 
16637(016641 
16687 to 16691 
16737 to 16740 
17001 to 17005 
17051 to 17055 
17101 to 17105 
17151 to 17155 
17201 to 17205 
17251 to 17255 
17301 to 17305 
17344 to 17348 
17394(0 17398 
17444(0-17448 
17494 to 17498 
27544(0 17548 
17594(0 17598 
17644 to 17648 
17694 to 17698 
17744 to 17748 
17794tol7798 
17844(017848 
17894 to 17898 
17944(0 17948 
17994 to 17998 
18044(0 18048 
18094 to 18098 
18144 to 18148 
18194 to 18198 
18244to 18248 
18294(0 18298 
18344(018348 
18394»18398 
28444 to 18448 
18494tol8498 
18544(0 18548 
18594tol8598 
18644(0 18648 
18694(0 18698 
18744(018748 
18794(0 18798 
18844(0 18848 
18911 to 18915 
18961(018965 
19011 to 19015 
19061(019065 
19111 to 19115 
19161 to 19165 
19211toZ9215 
19261 to 19265 
19311 to 19315 
19411(019415 
19461(019465 
19511(019515 
195611D19S65 
19611(019615 
19661*019665 
19711(0 19715 
19761(019765 


Redemption and p aym e nt of interest will take place at the following bads; 

CREDIT LYONNAIS, Luxembourg - HILL SAMUEL & CO. LIMITED, London - 
COMMERZBANK A.G., Frankfurt - BANQUE BRUXELLES LAMBERT, Bruxelles - 
CREDIT LYONNAIS, Paris. 

Amount renaming in circulation after this fourteenth instalment: 

FRF 15 000 000,- 

We recall that following bonds for procee din g instalment have not yet been presented fig- redemption: 

June 15th, 1986: 


2693 102694 
3135 (0 3136 
5228 

6260 to 6264 

6639 

10086 


2710 to 2713 
3212 to 3213 
5754 to 5756 
6305 to 6306 
6771 to 6772 
10865 


2766 

3264 

6048 to 6049 
6366 

7266 to 7270 . 
10871 to 10875 


2872 1o2874 

5043 

6078 

6494 106496 
9857 to 9861 
10881 to 10885 


3112 to 3113 
5120 to 5124 
6256 

6599 to 6602 
10077 

11201(011202 


Hue Fiscal Agent 

CREDIT LYONNAIS LUXEMBOURG 


EUROMONEY PUBLICATIONS PLC 


HALF YEAR RESULTS 


The underlying growth in our business during 
the first half of fixe year was stronger than the 
results suggest because our profits were hit 
by the 10 per cent fall in the dollar against the 
pound (some three-quarters of the comp- 
any's revenues were in dollars). 

OtirturaoverinthesixinorithstoMarch31was 
£9, 597,000 against £8,727, (XXJmthefirst half of 
last year. Unaudited, net profit before tax was 
£2,357,000 against £2,178,000. The interim 
dividend is 5p a share (4.6p). 

Our six magazines. Euromoney, Co r por ate ’ 
Finance, Eummoney Treasury Report, Inter- 
national Financial Law Review, Euromoney 
.■Dade Finance Report and Banter Inter- 
national continued to perform well Our book 
publishing business, conferences and semi- 
nars all prospered. 

We launched Euromoney Digest, our interna- 
tional financial magazine in file Japanese 
language, in November 1986. Global 
Investo, aimed at major investors around the 

Wadd, began in April, and Chigmonth saw thn 

debut of Euroweek, cur weekly newspaper 

on file mtet-nsrtvrnal r-npifo>J rrwrVtate 

Our database business is exciting. We 
laqpchedanewdatabR.se covering the inter- 


national equity market in December 1986. 
We will introduce another new database - 
Bondware 2 - covering Swiss franc, and other 
foreignbonds, next month. We are preparing 
a further two databases to offer subscribers 
later this year. 

We are establishing an education business, 
the Euromoney Institute of Finance. Hs first 
programme is in August and the Institute 
should contribute to profits in the second lmlf 
of our year. 

We have completed file, acquisition of 
Hankins Publishers which adds Leasing 
Digest and Air Finance Journal to our list of 
titles. 

Your directors are also pleased to report 
that Mr Takashi Hosami, the distinguished. 
Chairman of the Overseas Economic Co- 
operation Fund of Japan, has become a 
non-executive Director of Euromaney 
Publications. 

Given reasonably stable exchange rates far 
the lest of this year, urn second half should 
show a satisfectory advance in profits. 

& Patrick Sergeant 
Chairm^ 



EUROMONEY 

(BytQH B QlffrP | Iffi dtr HOn(T| THlttl 
LONDON EC4V 5EX 


UK NEWS 


Thatcher set to 
attack Labour’s 
‘hidden policies’ 

BY MICHAEL CASSELL, POLITICAL CORRESPONDENT 

MBS MABfiAft Jb tr Thatcher. Prime posak which have been previously 
Min i ste r, yesterday rejected sug- adopted as party pofic y but which 
I gestums that the Co nse rva ti ves had were omitted from the election doc- 
. lost file initiative zn the »!*■«*'«" nnn»nt 


'wiQ today step op their 

against the Labour Party. 

Shortly after her declaration, Mr 
Neil Khmock, the Labour leader, 

confidently predicted for the first 

timB party Knoflmg fo r 

a working majority in the next parl- 
iament. Be declined to telecast the 
size of Labour's win but said the 
party was in fine for a firm election 
\ victory. 

fifr Bryan Gould, Labour's cam- 
paign co-onfinator, said: “We are 
now warned, and we should be flat- 
tered, that the trig guns win be 
tuned an us. We will have to bear 
that with aQ the equanimity and 
fortitude we can summon.* . 

Social Democratic Party liberal 
Alliance leaders yesterday cootih- 
ued to brush off their disappointing 
performance m the opinion polls 
anrf repeated their claims ***** they 
expect to benefit from a squeeze on 
support for Labour, which could not 
win on June 1L 

Mr David Steel, the liberal lead- 
er, said: “We are not saying the 
polls are wrong we say opinion 
moves." 

Dr David Owen, the SDP leader, 
predicted that the Tory lead in the 
polls would. later in the campaign, 
come down below 37 percent, when 
it would “start to get interesting.” 

Amid *i gn« fh«t the Tor ies, after 
a good week for Labour, are about 
to put their own campaign into top 
gear, Mrs Thatcher is today expect- 
ed to use a rally at Newport in 
south Wales to return to what, at 
the outset of the «™p**'gn, she 
dubbed Labour’s “iceberg manifes- 
to." 

In a wave of campaign speeches 
around the country, Mrs Thatcher 
and her colleagues will today be 
highlighting a range of Labour pro- 


Tory strategists beSevefbat, des- 
pite Labour’s positive start, it re- 
mains vulnerable on a wide range 
of issues, from defence and- public 


spending to left-wing dominated lo- 
cal authorities. 


Mrs Thatcher said yesterda y : 
“We shall have a go at the others; 
we have to because we believe their 
policies would be absolutely disas- 
trous for our country, for its reputa- 
tion and for the fmvlampnfoi libert- 
ies for which it stands.” 

She stressed that the Tories 
would be fighting on positive poli- 
cies but that they had to show why 
their opponents could not produce 

the prosperity, the property^oxvning 
democracy or a defence policy fit to 
ripfarwf tJh** 

While Labour yesterday concen- 
trated on attacking the Govern- 
ment’s record on the health service 
and the Alliance concentrated on 
education, the Tones made the 
■economy the major issue. 

Mr Nigel Lawson, the Chancellor 
of the Exchequer, said that no gov- 
ernment h**l entered an 
rttmpwign with a stronger erannmy 
behi nd it and the British electorate 
had to consider whether it was pre- 
pared to throw away eight years of 
achievement in a arin gfa 
day. 

If Labour was to be re-elected, he 
claimed, it would mean collapse and 
aretomto the “asylum of the Inter- 
national Monetary Fund within 18 
months to two years.” 

Mr Lawson, who restated bis par- 
ty’s determination to reduce file ba- 
sic rate of income tax to 25p, said 
that there was no to 

lower the top rates of Income tax 
but they would be examined in the 
fight of the potential “brain drain* 
effect of lower rates of tax overseas, 
particularly in the United States. 


Manufacturers se< 
improvement in expert orders 


BY JANET BUSH - 

BRITISH manufacturing industry 
saw a substantial improvement in 
export orders asd domestic busi- 
ness in the first three mon t hs of 
1987, wwtiminiff the trod of late 
test year, and many businesses are 
now expecting to take on new work- 
ers, according to the latest quar- 
terly survey by Britain's chambers 
of commerce. 

The Association of British Cham- 
bers of Commerce said, however, 
that the pound's rise this year was 
steadily eroding the competitive 
gains resulting from last year's sub- 
stantial depreciation and urged the 
Government to cut interest rates by 
another 2 percentage points - “and 
soon.” 

Miss Lynn Howarth, the associa- 
tion's wrier***! relations director, 
said: “We have been through eight 
years of heU. This is the first tune 
we have seen economic trends take 
off in this way in a long; long time. 
E sterling is kept down and our ex- 
porters can keep up their share of 
the world market, there is no rear 


son why these trends should not 
continue.” . 

The survey, of more than 3,300 
comoanies employing more than 
74JJOO peophfc shows over a fifth of 
manufftcbaing companies expect - 
ing to increase their workforce in 
the next few months, double the 
number of the last survey. 

The association said the survey 
' gave- "grounds for cautious opti- 
(hn* the xraianplcyntfaxt tide 
really has started to turn.” 

It said the results were particu- 
larly heartening as they tended to 
suggest the strong eco no mic recov- 
ery, which had previously been con- 
finwi muinly to the southern. En- 
glish counties, was sow spreading 
to the traditional manufa cturin g 
heartlands. 

There had eves been an up-turn 
in the West Midlands, the only le- 
gion not to have experienced * sign- 
ificant recovery in the association's 
fourth-quarts' 1988 survey, al- 
though the results, show tittle 
change in the prospects of non- 


sectors and slight 

to fob prospects. 

# association estimated that 
it half of Jest year’s competitive 
from sterling's substantial de* 
" n had already been fott 
th&n taro thirds of those 
cited high British interest 
the key factor Inhibiting 

I I Cor the 

i Treasury 

e tending 
aysconfi- 
at home 
dented by 
s value. 

Ep another 
ndustry - 
a general 
:e of com- 
tea m re- 
t the first 
The most 

were the 
. Mersey 
England. 


US budget deficit is blame! for 
limiting world economic griwth 


BY JANET BUSH 

THE HUGE Tmhfllatwp caused by 
the. US budget and external deficits 
have become the major constraint 
on world growth, overshadowing 
the favourable effects of lower oil 
prices, according to the latest world 
economic outlook by Lloyds Bank. 

The hanlr says economic growth 
in industrial nations is likely to fall 
to 22 per cent this year, even less 
than 23 per cent in 1986, and is like- 
ly to remain at this level on average 
for fixe next five years. 

Domestic US policy will tend to 
depress demand as the Administra- 
tion tackles the budget deficit and 
probably raises interest rates to 
stop a dollar crash. At the same 
time, Japan and West Germany are 
unlikely to provide the missing sti- 
mulus to the world economy. 

“The gradual smafi relaxations of 
Japanese and German monetary 
policy that are taking place ureter 


US pressure may do little more 
than brake fixe dollar’s fall but udD 
not stimulate investment in either 
country while export prospects for 
their major industries are so 
bleak.” Lloyds says. 

Lloyds says the US current ac- 
count may worsen to over $150bn 
this year and next before coming 
down to S135bn in 1991. At the same 
time, Japanese and West German 
sonduses are -set to continue at 
around SJObn and SSShn this year 
and next falling to S8Shn and S27bn 
by 1S9L 

The developing countries toe 
forecast to grow faster than indus- 
trialised nations at 3JJ per cent a 
year, due mainly to continued rapid 
growth in newly faHnsirteHiring 
countries in fixe Far East 

However, as fixe industrialised 
economies win provide only moder- 
ate market growth for developing 


comrira emarts. the dev^ng n«- 
ttoBswiti in many casesw to re- 
ly an domestic stimulus \oi x liv- 
ing standards. 

They will “as ever be tyect to 
balance of payments cat m ints 
and fixe shortage of internal^ ft. 
nance to rtiieve them,” Lfoyis^ys, 

The industrialised growth^te of 
12 per cent is well below the per 
cent figure generally though^ be 
fixe minimum needed to enables, 
er developed countries to sejee 
their burden of debt Lloyds raj. 

It forecasts an upturn in infio^ n 
to 2.T per cent this year in the 5 . 
dustrial countries compared u*, 
21 per cent in 19*6 and then to r\ 
further to 4 per cent in 1991. Asia', 
expected to have low inflation whil 
fixe inflation rates of Latin Ameri 
ca's major debtors are again in- 
creasing into three-figure annual 
rates. 


(• v " ! -1 \ • i 

'» jj- • J >; 

£Y,/^ 

•TV • I 



Hong Kong, gateway 



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13 


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Coca-Cola and Schweppes 
withdraw tinion recognition 


BY PHHJP BASSETT, LABOUR EDITOR 


UK NEWS 

Rolls-Royce workers 
show enthusiasm 
for shares offers 


Londoii 
pays off 


COCA-COLA and Schweppes, the 
joint venture soft drinks company, 
has stripped its senior managers of 
union recognition while Cadbury 
Schweppes, the food and drinks 
group, has withdrawn collective 
bargaining from its senior manag- 
ers. 

The two moves are among a very 
small number of examples of com- 
panies successfully challenging tra- 
ditional union representation. Al- 
though some de-recognition moves, 
such as the Govenunents's baa oa 
trade union s at its GCHQ intelli- 
gence communications centre, have 
provoked opposition and public no- 
tice, others in the private sector are 
happening with relatively little pub- 
licity or opposition. 

In response to the two moves, the 
Cadbury Schweppes Senior Manag- 
ers’ Association, a registered inde- 
pendent trade union, has balloted 
its 850 members and secured a 6-1 
vote supporting the union. The as- 
sociation has now requested a 
meeting with Sir Adrian Cadbury, 
Cadbury's chai rman 

Coca-Cola and Schweppes has 
mode die more radical move. Cad- 
bury Schweppes at the end of last 
year formed the joint company with 


Coca-Cola, the world’s largest soft 
drinks company, to h andle all their 
respective soft drinks brands in the 
UK. 

Coca-Cola does not recognise 
trade unions in the US, nor at its 
bottling and distribution centre in 
the predominantly non-union town 
erf Milton Keynes, north of London. 

Accordingly, once the joint ven- 
ture company was in operation, the 
company gave the CSSMA notice of 
its intention to terminate its recog- 
nition agreement with the union, 
which has about 200 members in 
the company. 

The joint company felt that it 
would be anomalous for some se- 
nior managers in the company to be 
organised in a trade union while 
others were not Salaries will now 
be negotiated individually, based on 
performance. 

In Cadbury Schweppes, senior 
figures in the company believed 
that the negotiating role of the 
CSSMA had become largely re- 
dundant With the internal re-orga- 
nisation following the Coca-Cola 
deal, the company decided to re-or- 
der its collective bargaining ar- 
rangements. 


Accordingly, the company told 
the CSSMA that it would not nego- 
tiate a pay review in 1988. In adv- 
ance of that, though, it withdrew 
from 1987 s negotiations and im- 
posed a pay settlement of 4J> per 
cent, plus increments of 2Jj or 8 per 
cent, depending on performance. 

In a letter to members, Mr Ron 
Brown. CSSMA acting president, 
says the company has taken away 
“unilaterally toe negotiating rights 
of the CSSMA without warning and 
almost certainly illegally." Refer- 
ring to Coca-Cola - Schweppes, he 
says the position there is “even 
worse, where there has been a loss , 
of recognition." 

He makes dear that, if the ballot, 
which the association won. rejected 
the statement that its members 
wished it to continue to be recog- 
nised by the company, then the 
union would have no choice but to 
wind itself up. 

Following toe vote, senior figures 
in the company are expected to dis- 
cuss the position this week, and the 
company - which says its relations 
with the CSSMA have always been 
benign - hopes that a solution sati- 
factory to all rides can be readied. 


BY PHILIP BASSETT, LABOUR EDITOR 


dockers 


EMPLOYEES at Rolls-Royce, the 
newly privatised aeroengine com- 
pany, have at least matched or even 
bettered toe take-up of shares of- 
fered to them by toe company in 
toe privatisation. 

. The company, which is expected 
to announce to its employees this 
week- precise details at bow many 
shares have been taken up, is likely 
to feelftat a-high take-up level will 
have fr positive impact on employee 
relations.-. 

About 8 per eeot of the total avail- 
able shares have gone to employees 
of the company aitfcnn gh Rolls- 
Royce acknowledges that some em- 
ployees have sold at least some of 
their shares for a quick profit as the 
share price soared in toe first few 
days of toe start of trading last 
week. 

The company even had to issue to 
its managers an iTi^ p mai note ban- 
ning emp ip yppR from leaving its 
factories at Derby, in the Midlands, 
during work tbw to share 
transactions. 

Shares were offered to employees 
in five separate ways - a free share 
offer to the value of about £70, plus 


£2 worth of shares tor each year's 
service; a matching offer, under 
which the company matched two 
for one bought share up to a 
total value of about £300; a 10 per 
disco unt nffiw for up to £2,000 
worth of shares; a priority offer 
aver the general pnbEc aL up.ste 
£10,000 worth of shares;- apdjjft 
sharesave scheme. - 
About 95 per cent of employee 
are thought to have taken up, the 
free share offer, but probably t£e 
most significant take^p is in the' 
sharesave scheme. . .. I 

Under this, toe price of some 1 
shares is frozen to allow employees 
to save up for them with toe Abbey 
National building society. 

Savings are made through pay 
-gai^at toe <> ’ n d of toe 
chosen savings period.q££ve qe_s£- 
ven years a tax-free banus~fif 14-ar 
28 month g* payments is addedL Em- 
ployees can then tiioose whether to 
buy the shares at toe original 

a greed priry nr telrp t he inrtw- 

ey * n d hpTW Si 

Previous schemes erf this sort 
have attracted a take-op erf about 35 
per cent of employees. 


By KevfoBrown 

SURPLUS labour has been efi- 
minated from the Port of London 
for the first tone since toe con- 
tainerisation of cargo began is 
toe mid -1960s. ' 

The animal report of the Port 
of London Authority, published 
yesterday, shows that the work- 
force tell by 813 to ZJ 58 last year 
=as a result of a bigger-toan-ex- 
- peeled response to a voluntary 
severance scheme. 

Employment in the Fort of 
-London peaked at about 35,000 in 
foernid -1956s, when the dockers 
handled about 69m tons of loose 
cargo a year. ' 

, The reduced workforce han- 
dled 4&3m,tans of cargo last 
year, an increase of L8m tons, 
largely as a result of higher im- 
ports ofcrDdemTand aggregates. 

The ” redundancy programme 
Was l aigetyrfin anced by toe Gov- 
ernment, under a scheme which 
has subsequently been frozen by 
toe . European - Commission, 
which is investigating its legality 
under toe eoMetition provisions 
of the Treaty of Rome. 


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Financial Times Tuesday May 26 1&87 

New Barclays chief 
braces for ‘biggest 
banking revolution 5 

BY DAVID LASCELLES. BANKING EDITOR. 

FOR ONLY toe second time in its 
200-year history, Barclays Bank has 
broken with tradition mid chosen a 
chmVmte 1 who does not belong to 
i one of its founding families. He is 

Mr John Quinton wbo takes over to- 
day at the age of 62 from Sir Tiao- . 
toy Sevan. 

The son of a clearing banker and 
lifelong Barclays man, Mr Quinton 
is careful not to overdo the import- 
ance of the choice. Previous “fenu- 
jy” chairmen all vent through the 

min and were “genuine executives 
trained as bankers from the start," 
he says. Even so, he expects Bar- 
clays staff to be gratified by the 
sight of “one of themselves having 
reached the top.” 

Mr Quinton could hardly fit bet- 
ter the role of clearing bank chief. 

He has the reassuring, sociable 
manner of a high street bank man- 
ager and is willing to speak bis Hr John Quinton: M You have 
mind. But he takes over at a time to ahead.** 

when very heavy demands will be 

made of tom. Not only is Barclays ^ p^dtion on toe domestic market 
m'deJy viewed « S pS to cross-sell its wide range or prod- 

from its traditional Potion at Brit- trustee services, insurance 

ain's number one tank, but the en- ^ w on although bank- 

vironment m which it operates is ^ ^ ^ to ^am to keep 
undergoing bewiMeriagly rapid retailers’ hours. 



change. 


“We are in the middle of the big- , Intenutifoualty, he wa* Bar- 
gest bank revolution,” be said hi his clays to hare » mwejshtly ir-te 
comfortably furnished office in Bar- grated rework vmh strong coropu- 
clays’ Lombard Street headquar- . ter bwldng. abteto deliver services 
tore. "Historians of banking will quickly around the world, 
look bade on the 1980s and say that One issue he will not have to deni 
was when the big changes took with is that of South Africa. Bar- 
place. We're slap in the middle of it . days’ withdrawal from that country 
My successors will probably say last year frees him from the con- 
their life is r ela tively easy." stant critical battering suffered by 

Electronic means of payment, the his predecessor and enables him to 
rapid growth of new forms of fi- concentrate on developing the busi- 
nanring , toe scope and ferocity of ness. 

competition - these are the forces A key piece in toe jigsaw is Bar- 
that Mr Quinton expects to have to days de Zoete Wedd (BZW). the 
contend with. For that, he needs to new investment banking arm creat- 
make Barclays “as quick on its feet ed in last year’s Big Bang dercgultt- 
as possible. You have to press tion. Mr Quinton hotly denies - os 
flhA«d You will occasionally make rumoured in the City of London - 
mistakes, but you have to have a tut to at he voted against Barclays' pre- 
list for successes." posed acquisition of brokers de 2o- 

Mr Quinton does not expect to in- ete & Sevan, and the jobbing firm 
traduce any big or rapid changes. Wedd Durlacher, which went to 
As an member of the top create BZW. He agrees that the pur- 

managemeat team (he was deputy chases were “high risk.” But he 
chairman), he was involved in adds: “If you want toe rewords, you 
many of the strategic decisions tak- take the high risks.” 
en by Barclays in toe past few “BZW is an essential part of our 
years armoury in dealing with corporate 

But there may be changes of customers and multinationals. A 
style. He intends to take a higher bank has to be able to provide a full 
public profile than Sir 'Hmothy and range of services." He maintains 
•drive home the message that higher that BZW has rapidly established a 
sales and lower costs are where toe good reputation in the securities 


profits come from. 


and capital markets and is making 


He admits that Barclays’ loss of money. He intends that it shall be- 
first place to NafWest last year was come “a global investment with re- 
ft blow although his aim is to get sources and capacity as great as 
back ahead of his rival in terms of any in the UK.” 
profits rather than b a l a nc e sheet Although Mr Quinton is only two- 
size. To achieve this “we must treat and-a-half years away from Bur- 
foe bank more as a business and days’ retirement age of 65, he has 
give it a greater sales orientation," an informal agreement with the 
he say&. This is not s omething that board to stay in foe post for at least 
banks have traditionally been good five years. This month he also be- 
at He recalls his father sa ying: “I comes chairman of toe British 
never go out and see a customer. Olympic Appeal which is aiming to 
They always come in to see me.” raise £2m towards the cost of send- 

He believes mu c h more can be mg the British team to foe 1988 
made of Barclays’ strong establish- games in Seoul 

Travel groups protest 
over new debit card 


BY CLIVE WOLMAN 

MANY LEADING travel agents, air- 
lines and hotel tour and ferry op- 
erators have set up a working party 
to examine electronic payment 
methods as part of a protest against 
the charging structure that Bar- 
clays Bank is to impose as part of 
its new debit card arrangements. 

In recent weeks, leading retailers 
have refused to accept Barclays’ di- 
rect debit Connect card which is de- 
signed as a substitute for the 
cheque book method of payment. 
Barclays plans to charge them a 
percentage of the value o! all trans- 
actions undertaken with the card 
whereas, for cheque usage by their 
customers, retailers are charged a 
small fixed fee per transaction. 

The Association of British Travel 
Agents said it was setting up a 
working party jointly with foe Trav- 


el Industry Systems Standards 
Group in a “move aimed at fighting 
the rising costs of automated bonk- 
ing." 

The association believes Bar- 
clays’ move upsets toe negotiations 
between itself and a consortium of 
banks over the best method of 
implementing and sharing out the 
costs of a co-ordinated Eftpos (elec- 
tronic funds transfer at point of 
sale) system. 

Mr Jack Smith, association chair- 
man, said: “We believe that Bar- 
clay^ action will cause confusion 
and h i n d er the progress of the ini- 
tiave as a whole." 

The working party will examine 
the value and volume of transac- 
tions and the economics of Eftpos 
and present its recommendations to 
the banking consortium. 


Consumer group seeks 
protection for debtors 


BY NICK GARNETT 

THE SYSTEM of debt recovery in 
Britain should distinguish between 
people who refuse to pay then- 
debts even though they have foe 
means to pay and those too poor to 
pay, the National Consumer Coun- 
cil says in a report published today. 

Such a system should protect 
debtors from harassment and un- 
due hardship, try to sort out debt 
problems before they are out of con- 
trol and achieve a fair balance be- 
tween the claims of competing cre- 
ditors, the council says in its naner 
Enforcement of Debt 

The paper is foe council's re- 
sponse to proposals for reform of 
debt-recovering legal procedures 
proposed m a review of civil justice 
The review was begun some years 
ago by foe Lord Chancellor. 

. ™MunciT s proposals for chan*, 
uig foe system of debt recovery 
9 °®es at a time of increased lead - 


The British now buy a third of all 
oothes, shoes, funiture, cars and 
household goods on credit com- 
pared with a quarter little more 
than 10 years ago. 

In proposing changes, the council 
Jg» system has many 

Caws. Among these were toe court 
kgsU terminology which 
dissuaded many who had a valid de- 
fence against a claim by a creditor 
from putting it before foe courts, 

cww Jj ou . nci . 1 ,*®YS county courts 
should deal with ail consumer debts 
magistrates courts should lose 
their jurisdiction over rates arrears 
cases Imprisonment for non-pay- 
ment of rates should be abolished, 

o, S" 1 T abp r board3 should 004 
for non poywent 

aid aS ** 1 V COunty ordw . 

tod debtors should ^ 

agQinst harassment 
through a new collection practices 


f . 


; : . ‘.t 


beat gloomy predictions 


Kevin Brown sums up the first stage of hearings into the Zeebrugge capsizing 

Avoidable errors that led to ferry disaster 


BY DAVID LASCELLES, BANKING EDITOR 


THE MAJORITY of the 27 primary 
dealers in the UK gilt-edged mar- 
ket, claimed to be operating posi- 
tively more than six months after 
the Kg Bang deregulation of the 
City of London. 

This result, which is confirmed 
by observations made by the Bank 
of England, is contrary to wide' 
spread predictions that i ntens e 
competition . in the restyled' gQls 
market would cause some houses to 
suffer heavy losses and withdraw. 

The Bank of. England, which re- 
ceives daily reports and quarterly 
profit-and-loss accounts from all 
dealers, says that most houses are 
showing am ail gains from their 
trading. Although there have also 
been losses, the diversity of the 
dealers experience base now been 
wide, and none of them are consid- 
ering withdrawing.: 


The encouraging performance is 
attributed by dealers largely to the 
strength of ^ gijtn market for 
much of this year. This has helped 
stimulate much higher levels of 
training turnover »nH mahl^ 
dealers to take profitable positions 
in the market. 

But other factors have included 
unusually strong foreign demands 
for gilts, the absence of serious 
"back office" problems and the 
smooth functioning of the Central 
Gilts Office which ads as a h paring 
house for the market 

Trading figures suggest that the 
dealers are dividing into three cate- 
gories. About eight houses have 
emerged as market leaders with a 
share of institutional turnover rang- 
ing between 8 and 9 per cent. The 
majority of the dealersfall into the 
second category with between 3 and 


8 per cent At the small end of file 
market, a handful of houses, have 
about 1 per cent 

The market consist en- 

tirely of brokers or jobbers who had 
a large gOt-edged business before 
Big Bang and now form part of larg- 
er. bank owned npnglom ff w tefr 

Foreign-owned dealers have 
achieved a sizable share of file mar- 
ket Five oat of the top eight belong 
to foreign banks, but UK bouses 
dominate among the medium-size 
and smaller dealers. 

The c o nclusi on drawn by the 
Bank of E»gfa«vj| at this stage is 
that the results axe positive end 
that the 27 dealers have largely 
gone about their business with cau- 
tion, but fiie strength of the market 
means it has not yet been folly text- 
ed. 


- - - -- ■ _ turns ju 

John Lewis pre-tax profits rise 28% gg 


BY NICK GARNETT 

THE JOHN LEWIS Partnership, 
the department 'store and super- 
market group, raised pre-tax profits 
last year by 28 per cent to £1 05.5m. 

Total sales for the year to Januar- 
y 31 increased by £199m to £L57bn. 
This represented a rise of 15 per 
cent, but 2 percentage points of this 
improvement resulted from com- 


paring 52 weeks' of trade in 1888-87 
with 52 weeks in the previous finan- 
cial year. 

Prices of goods sold In file group's 
superma r kets rose by 3 per cent 
and those in its department stares 
by L5 per cent 

Taking the effect of these and the 

extra trading week into account de- 


Lloyd’s costs rise 
by 30% to £100m 


BY NICK BUNKER 

THE COST of running Lloyd’s of 
London soared by 30 per cent to 
reach nearly QOQm last year, be- 
cause of rising staff numbers, the 
burden of implementing new regu- 
lations and fiie expense of moving 
to the insurance market's new 
headquarters building in Lime 
Street, London. 

The figures axe published today, 
in the annual report of the Council 
of Lloyd's, the market's ruling body. 
They show the biggest percentage 
increase for at least five years in 
spending by the Corporation of 
Lloyd's, the markets central secre- 
tariat. 

They also come at a time when 
Lloyd's is facing a further increase 
in regulatory costs as it begins 
making the 70 reforms recom- 
mended in January fay Sir Patrick. 
NeilTs report on fiie mariners stan- 
dards of investor protection. 

Mr Peter MiDer, the market's 
chairman, writes that "considerable 
resources" are now being devoted to 
imple ment i ng the Neill fin din gs. 

Total spending by the corporation 
ru m p to E981m in 1988, up from 
CT52m in 1985 and £73 2m in 1584. 
The corporation’s main fu n cti ons 
iwrindft r unning the Lloyd's build- 


ing and the Lloyd's Policy Signing 
Office in Kent, as well as regulating 
Lloyd's underwriters and brokers. 

Its staff costs rose by £7 Jan, 
largely reflecting a 7 per cent in- 
crease in numbers to 2451, "««* of 
it due to recruitment by the corpor- 
ation's regulatory deportment 
the hiring of more professionally 
qualified staff. 

Premises costs rose by £5J5m be- 
cause of fiie move to the new build- 
ing, opened by the Queen last No- 
vember. 

Despite accelerating costs, the 
corporation reported' a net surplus 
of £12,8m on its revenue account 
This was mainly because subscrip- 
tion income from underwriting 
members of Lloyd's rose by 28 per 
cent due to recruitment of 2J500 
new members and increased under- 
writing by another 8JOOO existing 
members. 

But fire prolonged recession in 
the world shipping market badly hit 
Lloyd's of London Press, publisher 
of the Ifoyds list, the marine trade 
paper. Pre-tax profits fell 24 per 
cent to £850,000, because of a slump 
in advertising revenue and sub- 
scriptions. 


Freight forwarders 
seek compensation 


BY LYNTON McLAJN 

TWELVE FREIGHT forwarders at 
Heathrow, Gatwiok and Manches- 
ter airports have issued a writ 
against Travicom, the joint British 
Airways/British Caledonian Air- 
ways computer company. 

Travicom operates the UKAS 
computerised airfreight clearance 
system atthe airports and was used 
by the freight forwarders. 

The system failed in November 
within hours of going five," the 
group of forwarders said yesterday, 
in utmnampmg a dUmt for £504,000 
from Travicom. This re p resents the 
costs so for identified by the 12 for - 
warders for their enforced switch 
back to the earlier British Te le com 
ACP80 computer system. 

The forwarders said: "Collapse of 
UKAS caused havoc in the air- 
freight community and long delays 
in Customs clearance. Many freight 
forwarders incurred heavy over- 
time wage bills and other costs in 


extricating their customers' cargo 
from the melee.” 

The 12 freight forwarders said 
the offer by Travicom in February 
of a compensation fund of £500,000 
to be shared by about 400 UKAS us- 
ers was "totally inadequate.” 

The freight forwarders forming 
the Travicom Action Group seeking 
compensation are : Air Action Inter- 
national: Brantford International; 
Circle Freight International; Four- 
dale Export Services; Immediate 
Transportation; Ivey International; 
LEP International; MAT Airfreight; 
Meadows Airfreight; Medtrans For- 
warding; Mitchell Cbtts and Univer- 
sal Consolida to rs. 

British Airways owns 82 per cent 
of Travicom, with British Caledoni- 
an awning the remainder. The com- 
pany had a turnover of £8J>5m and 
a pre-tax profit of £1.45m in the 12 
.months to the end of March last 
year. 


Welsh centre opens for 
semiconductor research 

BY ANTHONY MORETON, WELSH CORRESPONDENT 


TWO colleges in the University of 
Wales have joined forces to set up a 
semiconductor and micro-electron- 
ics centre. 

University College, Cardiff, and 
the University of Wales Inst itute of 
Science and Technology (UWIST) 
which are both based in the Welsh 
capital, have opened the centre 
which already has won more than 
£ 2 m in grants for research projects 
and contract work for the main 
British electronics concerns. 

The centre has rec ei ved £445,000 
from ihe WeishDewriopment Agen- 
cy as well as support from Cardiff 
City Council and the South and Mid 
Glamorgan county councils. 

Behind the centre lies the initia- 


tive of two men. Professor Robin 
WBliaxns. head of physics at Uni- 
versity College, and Professor Ver- 
non Morgan, p rofesso r of micro- 
electronics at UWIST. They have 
become its joint directors. 

They believe the centre will 
strengthen research into the new 
materials fiat will form the next 
generation of microchips. 

“We like to think of the centre not 
only as genera ting industry and 
employment hot as being a small 
industry in itself." said Prof Willi- 
ams at the opening. 

The centre is also intended to act 
as a catalyst in attracting industry 
to Wales a "d in the generation of its 
own spin*off industries. 


partment store sates rose by £80m 
(11 percent) and supermarket sales 
by fJSm (8.5 per cent). 

Tbe group spent £03m on land, 

K niHtng^ fMnrwt imH whMwi 

fog the year. This includes three 
new Waitrose supermarket 
brandies. 


FOR the survi vors of the Herald of 
Free Enterprise, the public inquiry 
into fiie disaster has been a daily . 
reminder of the horror of that night 
in March when fiie unthinkable 
happened and nearly 280 people 
lost their lives. 

In the solemn surroundings of 
Church House, in London, the ad- 
ministrative headquarters of the 
Church of England, the survivors 
have described in detail the few mi- 
nutes when the ferry capsized only 
yards outside file safety of Zee- 
brugge harbour. 

- There have been tales of courage 
and of cowardice, of bravery and of 
fr i m fl fi ii g . But most of all there has 
been a pervasive sense of unfair- 
ness and injustice; as if everyone 
who was there is still asking why it 
had to happen to him. 

”R was such a normal day,” said 
Captain David Lewry, the master 
on the night of the disaster. 1 As if to 
prove it, the nightmare explana- 
tions ; pf survival in the freezing, 
blacfced-out hull are preceded by 
glimpses of shift changes, tea 
breaks, restaurant menus, and all 
the everyday details of normality at 
wok. 

The tone was set on the very first 
day by Mr David Steel, the barris- 
ter representing Mr John Moore, 
fiie Transport Secretary, and the 
man from whom the other seven 
teams of hamsters take their cue. 

Mr Steel who has been fully 
briefed on the results of the Trans- 


port Departments preliminary in- 
quiry, has led -the questioning of 
witnesses with the firmness of a 
man who knows where he is going 
and what he will find when be gets 
there. 

He began by confirming that the 
disaster was caused by a massive 
inrush of seawater into the car deck 
of the ship through its open bow 
doors. 

For those who found it hard to 
comprehend how a modem passen- 
ger ship could go' to sea with its 
doors open (a bit like “frying to land 
a Jumbo jet without wheels) he had 
a simple, if shocking, answer: The 
diseases of a sloppy system and 
sloppy procedures infected not just 
those on board ship but well into 
the body corporate of Townsend 
Car Ferries.'" 

Townsend, a subsidiary of Penin- 
sular and Oriental Steam Naviga- 
tion, subsequently took much of file 
heat out of the inquiry by publicly 
accepting the hiHirw* end admitting 
that the accident was caused by 
"avoidable human error both afloat 
and ashore.” 

As the inquiry has progressed it 
has become dear that whatever the 
r ecoin m e ndations made by Mr Jus- 
tice Sheen, file chief culprit will 
have been shown to be the lack of 
proper management systems to 
make sure that simple but crucial 
shipboard tasks were carried out 

The inquiry has already estab- 
lished that Townsend's ships op- 


‘Diseases of a sloppy 
system and sloppy 
procedures infected 
not just those on 
board ship' 


erated a negative reporting system, 
under which the master assumed 
that all was well unless he was in- 
formed otherwise. 

On top of this, conflicting regula- 
tions issued to the crew required 
some key personnel, including Mr 
Leslie Sable, the chief officer, to be 
in two places at the Mmn time. 

Partly for this reason, there was 
a misunderstanding about which of- 
ficer was in charge of loading, and 
no-one checked that the bow doors 
had been shut 

Mr Marc Stanley, the assistant 
bosun with nominal responsibility 
for closing toe doors, was asleep in 
his cabin, believing he had been 
stood down from duty. 

The inquiry has also heard evi- 
dence that Townsend's manage- 
ment resisted requests from seago- 
ing masters for bridge warning 
lights which would have indicated 
that the doors were not closed. 

One manager replied, in one of 
an astonishing series of memos: 
"Do they need an indicator to tell 
them whether the deck storekeeper 


is awake and sober, my goodness?" 

Another memo said: “Nice, but 
don't we already pay someone?" 

The author of the memos, Mr Jef- 
frey Develia, a director of Town- 
send, said indicator tights had been 
fitted to the company’s ships within 
a few days of the disaster at a cost 
of about £40Q-£500 a vesaeL None of 
the ferries had to be taken out of 
service for the work to be done. 

Some of the most shocking evi- 
dence has concerned toe company’s 
methods of establishing the num- 
bers of passengers sailing in its 
ships. These appear to have been 
rudimentary, and often wrong. 

At least seven masters were said 

to have become suspicious of the es- 
timates supplied by shore staff and 
found after a head count that there 
were hundreds of extra passengers. 

This problem had painful conse- 
quences after the Herald incident 
when Townsend was unable to sup- 
ply accurate details of passengers 
on board the ship when it capsized. 

The company has since apolo- 
gised for the “enormous distress” 
caused to people unable to discover 
whether relatives had sailed on the 
ship and has announced that it is 
seeking ways of recording the fig- 
ures more accurately. 

It has also emerged that draught 
readings were not usually taken - 
which meant that there was no 
check on whether the ship was sail- 
ing on an even keel 


The inquiry will go on, in the 
weeks of sittings to come, to hear 
evidence from technical experts on 
the cause of the rapid capsize once 
water bad entered the ship. 

Mr Justice Sheen will be aided in 
evaluating this by the results of a 
re-run of the Herald's last journey 
carried out under controlled condi- 
tions by its sister ship. Pride of 
Free Enterprise. 

Many questions remain to be an- 
sered- They include: 

• Are roll-on roll-off ferries of the 
type operating around Britain's 
coasts inherently unsafe? 

A Why were the crew of Herald ap- 
patently untrained to deal with a 
rapid capsize? 

A Did commercial pressures on the 
operator lead to skimping on safety, 
either in design or operation? 

A What changes in design or proce- 
dures should be recommended to 
make sure such a tragedy never 
happens again? 

The inquiry has moved recently 
to the less imposing surroundings 
of the Official Referee's Court, in 
London's Kingsway - perhaps a 
more suitable arena for the detailed 
technical argument that is to come. 

But for those who attended the 
first weeks of the inquiry at Church 
House, the Zeebrugge inquiry will 
be for ever associated with the mat- 
ter-of-fact restraint with which the 
survivors painted a picture of disas- 
ter. 




16 




Financial Times Tuesday May 28 1987 


This adxertisement complies uiih the requirements of the Council of The Stock Kxchange. 


UK NEWS „ 

CJiye Woltnan on the secondary market in loans to Third World countries 


itm 



VFRNEAS TRUST PLC Putting a price on 


(Incorporated in England) 


£35,000,000 

9 per cent. Secured Debentures 2012 

The issue price of the Debentures is 89 34 per cent of their principal amount 

The following have agreed to subscribe for the Debentures: 

Morgan Grenfell & Co. Limited 

Alexanders Laing & Cruickshank Euro-Securities pic 
Baring Brothers & Co., Limited 

Kleimvort Benson Limited 

S.G. Warburg Securities 

Application has been made to the Council of The International Stock Exchange of the United Kingdom and 
the Republic of Ireland Limited ("The Stock Exchange”) for the Debentures to be admitted to the Official 
List. 

The Debentures will bear interest as from 2 June 1987 payable annually in arrears at the rate of £900 per 
£ 1 0.000 nominal amount of Debentures, the first such amount of interest being due on 2 June 1988. 

Particulars of the Debentures and ot Anglo & Overseas Trust PLC are available in the statistical services of 
Extel Statistical Services Limited. Listing Particulars for the Debentures may be obtained during usual 
busi ness hours up to and including 28 Mav 1987 from the Company Announcements Office of The Stock 
Exchange and up to 8 June 1987 from the followings 


Anglo & Overseas Trust PLC 
46 New Broad Street 
London EC2M 1NB 


Alexanders Laing & Cruickshank The Royal Bank of Scotland pic 

Piercy House Stock Department 

7 Copthall Avenue Regent House 

London EC2R 7BE 4 2 Islington High Street 

London N18XL 

26 May mi 



Walton Heath Coif Chib 
10-13 th September 1987 


\ / 7 Don’t leave yourself 

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fill m the 

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. ■** A These prestigious events offer you the 

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^Tfl g 14^0 Hf S lA/fll in an exclusive atmosphere, whilst enjoying 

ILiL UIlv \rJL l Vf v the spectacle of world dass golfers 





Walton Heath Golf Club 
10-I3th September, 1987 


; I i'l ill B Ml ill 

7 AT; 


Thursday Satuntyi Friday only 

Sunday 

Tables (seating up to 12 persons) can now be 
reserved in the popular Executive Cub Pavilion, and 
includes: admission to the course with car parking, 
programme and daily draw sheet, morning coffee and 
croissants, four course lunch and afternoon tea. 


J?/X- J&y 

Just outside Bournemouth lies the renewed 
championship course at Femdown, host to die 1987 
La Manga Chib Ladles European Open. The leading 
European and International lady professionals will be 
competing for <£50,000, the top U K. prize purse on 
the W.RG.A. circuit. 

. offers a superb range of hospitality 

facilities both on and off the course from Executive 
Pavilions overlooking the I8th green to Hospitality 
Suites in the exclusive Dormy Hotel. 


These prestigious events offer you the 
unique opportunity to entertain your clients 
in an exclusive atmosphere, whilst enjoying 
the spectacle of world dass golfers 
inaction. 


BIFCHGREY 


BUSINESS 


CLUB 


The Birchgrey Business Chib affords benefits to 
patrons at the Panasonic European Open Gotf 
Championship. 

Once you have signed your contract to the event 

you are then entitled to free membership of die Chib 
which offers you a variety of benefits, such as: 
Privileged prices for hospitality suites at the La Manga 

Chib 1987 Ladies European Open. 

Imitation to post tournament ertrwagama. 
Opportimity topartkipate tnourweeWongmixed 
Pro-A mat La M anga Chib Spain, either free of charge 
or at substantially discounted rates, and discounts 

throughout the year on a range of specialised 
merchandise 


To: Birchgrey Limited, Broadway House The Broadway Wimbledon, LONDON SW19 IRLlUephone 01-542 9048. 
me details oru □ 1987 Panasonic European Open Coif Championship. 

LJ 1987 La Manga Ctuh Ladies European Open. 

O The Bireheiey Business Club and other 72 bok events. 


THE implicit admission by Citicorp, 
the largest US bank, that the 
chance s of retrieving the full value 
of its Third World debts are remote 
has revived the debate, particularly 
among accountancy firms in the 
US, as to how for other banks 
should go in writing off their debts. 

Most auditors are residing the 
view that the prices at which Third 
World loans are traded between 
banks and other companies in sec* 
ondary markets represent the best 
esti ma tes of their repayment pros- 
pects. 

According to Mr John TaitersaH, 

[ a banking specialist at accountants 
Coopers & Lybrand, secondary 
market values are not appropriate 
if a bank has no plans to sell any of 
its loans but intends to hold them to 
maturity. He says the secondary 
market is too small and vulnerable 
to distortions to be a reQahle indica- 
tor of values. 

However, Salomon Brothers, one 
of the leading market-makers in 
Third World debt, says that the 
market has become highly liquid 
and efficient Abont 250 banks *mri 
50 non-financial companies are 
trading in the market, the turnover 
in which is expected to reach SlObn 
to S15bn this year. Tims, it says, 
market prices represent a more re- 


UK BANKS: THE EFFECTS OFWfUTtHG DOWN THIRD WORLD 
SOVEREIGN DEBT TO SECONDARY MARKET VALttfcS 

, CMt,utn 

gggg wUftfeH MU sn W i n 

DeM exposure tlm ^mS IWi y rt ait Kretof 

„i„. provisions . equity 

JULC BZW HD Avgs ***"" On . 


Barctm 3.1 2* 2A 2.7 m. 0S7 14% 

Uoyds JLG 3.1 - 33 13% 0J9 29% 

Mdland 4A 3J 42 42 19% 1.14 57% 

NstWMt 23 XO 2j6 24 19% few » 10% 

StcLChrtd. 2 j 6 - 2A 10% , OJO 54% 

(CWcorp after <3bn write-off: 31J%) J ■ • ■ ~ ■ 

Debt exposure estimates we of the banking analysts of ALC( Alexanders Lmng 

and Cruickshank)] BZW (Barclays da Zoets WeddJandPSD (PhBBps and Dram. 

ALC figures inducts South Africa. Secondary marketpriCes pr ovided by Salomon 
Brothers. Estimates ot equity (shsrehoklena' funds) tram Decem b er 3J 1966 bal- 
ance sheets. 


liable consensus view than the sub- 
jective opinions of top b a n king ex- 
ecutives, which auditors currently 
accept 

A further attraction of "market 
mg to marker the debts is that the 
banks would no longer have to rea- 
lise book losses if they sold some of 
their debts to diversity their risks 
and to secure immediate tax relief. 
In a move to circumvent fee tax au- 
thorities’ reluctance to grant such 
relief, Japanese banks recently sold 
S500m of their Mexican debt at a 42 
per cent discount to face value (the 
secondary market price) to a Cay- 


man Islands romp»n y jointly 
owned by & of them. 

Tax consultants in London .be- 
lieve .a similar device could be used 
to overcome the obstacles set up by 
the Inland Revenue. 

In the secondary market last 
week, loans to Third World coun- 
tries were traded at discodnts to. 
their face values of between 27 per 
cent in the case of Venezuela to as 
much as 91 per cent in the case of 
Bolivia.'The weighted average dis- 
count for all sovereign debt to re- 
scheduling countries is probably 
dose to that for Brazilian debt, 


about 37 per cent 

As a result of Citicorp’s mow last 
Tuesday, it is now allowing for a 
write-off of about 31 per cent o£ its 
debt to rescheduling countries, 
which Is comfortably dose to the 37 
per cent figure, 

However. London banking an£ 
fysta believe that the tending UK 
banks have made provisions for on- 
ly as Ktite as 10 per cent of the val- 
ue of. their loans to re-scheduling 
countries in the case of Midland 
and Standard Chartered and 19 per 
cent in the-case of National West- 
minster (see table). 

These figures assume that aO the 
bank's general provisions against 
)H debts, even for domestic debts, 
wn tie applied exclusively to th ei r 
sovereign debt 

If Midland. Lloyds ami Stamford 
Chartered were forced to mark 
down their imu to their market 
values, analysts estimate that their 
profits would be wiped out for more 
than a year. In addition, they would 
lose so much equity some form 
of recapitalisation .would become 
necessary to satisfy Bank of Eng- 
land prudential requirements. 

The on Friday that it 

dkt not wish to enter a debate i n the 
press about whether a tougher writ- 
ing-down policy was necessary. 


Pension body launches publicity campaign 


that the budget for a more serious 
advertising campaign would have 
been £5m-£7m, outride the scope of 
the NAPF, even if a special levy 
was charged on members. 

Accordingly, the association will 
rely heavily on member pension 
schemes to promote the publicity 
campaign's “look-before-you-leap" 
message, with the aid of leaflets 
and a lb-minute video starring co- 
median Lenny Henry. 

Mr Woodward warned members 
at the Birmingham trmfpr ancg that 
they would be operating in a quite ' 
new environment from next year, 
facing direct competition for the 
first time. 



BY BARRY RILEY 

THE NATIONAL Association of 
Pension Funds (NAPF) is to launch 
a £300,000 publicity nflmpflign to 
counter the threat that, forge num- 
bers of occupation scheme mem- 
bers will opt for personal pensions 
when they gain the right to choose 
next April 

But the NAPF, which represents 
1,300 of the biggest pension 
schemes of companies and other 
large organisations, has not been 
able to contemplate a major adver- 
tising campaign aimed directly at 
the 10m or more scheme members. 

Mr Charles Woodward, the asso- 
ciation's Dew chairman J tnM the an- 

nual conference at the weekend 


North Sea 
oil drilling 
activity 
picks up 

By Lucy KeQaway 


DRILLING activity in the North 
Sea is picking up from the lows 
reach ed earlier this year as higher 
oil prices boost confidence and the 
summer season ha gina 

In the first three weeks of May, 
10 wells were started, according to 
stockbrockers Wood Mackenzie. If 
activity continues at the same level 
until the end of the month, it will be 
as busy as March last year, before 
the sharp cuts announced by the oil 
industry had been put http effect 

Even thou g h activity remains 
well below the levels of 1984 and 
1985, there are signs that the trend 
is upwards. 

There are now 18 rigs at work 
drilling wells in die North Sea, five 
more t han in March when there 
were fewer working rigs than at 
any time since 1879. 

Maintenance work in the North 
Sea is expects! to be particularly 
heavy this year and could result in 
a loss of 430,000 barrels of oil a day 
(b/d)in June. 

Wood Mackenzie estimates that 
average June production could fall 
below 2m b/d for the first time in 
several years, nearly 600,000 bar- 
rels less than average production 

last year. 

The main work to be carried out 
is on the pipeline from the Forties 
field, the largest ofl field in the 
North Sea. The Forties field and the 
nearby fields which use the line will 
be closed down for 18 days while 
the work is being completed. 

Output may be further depressed 
next month as companies postpone 
production until July, the start of 
the next taxable period. 


Holiday Inn® hotel bedrooms are bigger than 
the average hotel room, with executive 
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And our professional but unobtrusive service 
makes business travel so much easier. 

More of what you want At more like the 

price you're happy to pay 
That's Holiday Inn hotels, 


\bute more than welcome 


‘‘Given our strong conviction that 
in the majority of cases our pension 
packages are the superior product; 
tins is a challenge we can meet,” he 
said. 

But pension schemes needed to 
be more flexible. “The design of 
many schemes can be improved so 
as to more effectively appeal to our 
different types of members," he 
said. 

The publicity programme faces 
the challenge foot the NAPFs own 
opinion survey has revealed that 
schemes have a fairly dismal per- 
formance in communicating with 
their members. 

According to a specialty commir- 


sioned Mori poll. 53 per cent of pen- 
sion scheme members know little 
or nothing about their scheme. Al- 
most a quarter said they had never 
received any infomation about pen- 
sions. Only 24 per cent said they 
had received leaflets or booklets 
apart from information given on 
first joining the scheme. 

Many pension scheme executives 
at Birmingham were apprehensive 
at the prospect of needing to com- 
pete witir the slick marketing, ag- 
gressive salesmen and large adver- 
tising budgets of the persona] pen- 
sions industry. 

The battle comes as the NAPFs 
membership is declining. 



Sandeman Founders Reserve Port 
No Longer Reserved- To The English. 


Have your F.T. hand delivered . . . 


every working day, if you work in the 
business centres of 

HELSINKI & ESPOO 

($ Helsinki (90) 694 0417 

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FINANCIAL TIMES 

buro pc s, Business Newspaper 

1 1 i C3 lMidm-Frjnkfan-Nc»Vift i - 










\ . ■ >■ 


xa 1 

•=*•«# •- • . 







*** Sy 


/ 

*A 


Financial Times Tuesday May 26 1987 


17 


-■'Of 





■1 - : 





THE UK ECONOMY 


A new way to beat the bogeyman 


WITH JK>KE?AKY tawets 
debunked, even the Jpnms 
Minister Menu likely to accept 
full entry into tbe European 
Monetary System as the only 
credible policy for further 
reducing inflation should she 
win the election. Certainly, 
monetary policy over recent 
months has been dominated by 
a desire to hold sterling stable 
against the Ddflark, possibly in 
preparation for post-electoral 
EMS entry. 

Bu t Jo ining tha to re- 
duce UK inflation tp West Ger- 
man levels would lie wrong- 
beaded for two reasons: it is 

the wrong «nacftsnlin to mince 
inflation, and 4 per cent infla- 
tion doe* not need reducing. 

Almost every International 
Monetary Fund adjustment pro- 
ground contains a devaluation 
of the whw rate to a' com- 
petitive level. Amt not without 
good reason, Cor eountleps teas 
developed countries have 
sought to reduce inflation and 
maintain Hying standards by 
fixtog their nominal exchange 
rates, only to endure dpterjorat- 
ttog trade balances and accumu- 
lating debt until a crisis fe rrc- 
cipitatpd. Yet among Inopa- 
tmiised countries there is a 
new consenatu that the W to 
control Inflation, 4n the absence 
of nsaWe monetary targets, is 
to peg the exchange rate «j»Lwt 
a low inflation ccoagngr like 
West Germany's, 

Advocates «r £MS eotiy for 
the WC apparently pee it to a 
cq unter-Inflationaxy substitute 
for monetary policy, The Chan- 
cellor ha* nested that entry 
into the EM5 would entaU a 
conunlflment to maintain the 
nominal exchange rate at the 
entry level, ft wage settlements 
continued to be inflationary 
these would not he ratified by 
sterling depredation. But such 
a policy could well prove u in- 
judged in the I7K a* it ha? in 
developing countries. 

The chart shows that UK 
producer price inflation re- 
mains 4 percentage points above 
the EC average and sir points 
above that in West Germany. 
There is still some oil price 
effect in these Agues, and the 
differential may contract some- 
what Blit etarn if the under- 
lying Inflation rate In Germany 
is l mt cent while that in the 
UK Is 4 per cent Using the 
sterEng/D-Mark nominal ex- 
change nte would yield a 3 per 
cent per annum appreciation of 
the teal exchange rate. 

The telwwe of p 
would deteriorate. Interest 
rates would have to be raised 
in support of starling, - suf- 
ficiently to reduce domestic 
demand amt import growth. 

Equilibrium might be sesebod 
if the defrfiisio* et thd UK 


Producer prices 


160i 


14© i- 


1980-100 





economy resulted in a decelera- 
tion in UK cost inflation to 
German levels. 

On vast experience the 
deceleration in cost inflation is 
more likely tp he achieved 
through productivity increases 
and employment cats than 
through a toil in the level of 
wage settlements. Even to 
achieve a three percentage 
point decline In cost inflation, 
manufacturing industry, would 
need to shed an extra 150,000 
idbs each year. . . 

UK inflation would then 
have been reduced. But the per- 
manent «ost is that UK growth 
would have to be kept below 


are practising deflation or over- 
valuing their exchange rates in 
the merciless pursuit of very 
low inflation. 

The alleged economic costs 
of inflation are rarely stated, 
but generally fall into three 
categories: market inefficiency 
resulting from lack of trans- 
parency of relative price move- 
ments; wasted shoe leather as 
individuals are forced to make 
more frequent trips to the hank 
to replenish real cash reserves; 
4nd deception of the populace 
by government as the latter 
services its debt to the former 
at nominal interest rates. 

But at low, stable and well 


Donald Franklin explains why 
EMS entry is not the 
answer to curbing inflation 


that in Germany— for there M 
nothing in theory or <in the 
experience of the past few 
years to suggest that if UK 
growth were to re-acralerate. 
Inflation would not also re- 
acceJerate. It Is notable that 
since 1983 whQe UK growth has 
been fast enough to generate 
increased employment, UK 

inflation has been rising relative 
to that in the European Com- 
munity' 

The tar question is why it 
matters that UK cost inflation 
is a few percentage points 
above that in Germany, go Jong 
as it is not accelerating. 

Inflation has become the 
bogeyman of the 1980s: 
countries from Sweden to Spain 


publicised rate* of inflation, in 
an Increasingly cashless society, 
and with the advent of index- 
linked savings vehicles, all 
these costs lose their bite. 

If it is conceded that 4 per 
rant inflation- is benign, or at 
least that reduction from this 
level is not worth any sacrifices 
in. terms of growth or employ- 
ment, it is nevertheless true 
that acceleration from this level 
is to be avoided. 

Exchange rate policy can be 
used to achieve this, but not 
through adherence to a fixed 
nominal exchange rate target. 
Rather the nominal exchange 
rate should be adjusted pre- 
to reflect the current 
to inflation rate (if this 


is acceptable, or the target 
inflation rate if it is not), as 
well as tost of other countries. 

Thus if UK inflation is stable 
at 4 per cent and Germany's at 
1 per cent the nominal f/DM 
rate should be eased downwards 
at 3 per cent per annum. If the 
Bundesbank prefers to reduce 
German inflation to l per cent 
rather than the UK economy 
being forced to deflate to com- 
pensate (the recent French 
experience), the £/DM rate 
should depredate by 5 per rant 
per annum instead. 

A single cross tote is inade- 
quate^ of course, but it should 
not be beyond the wit of the 
Bank of England to create a 
target rate tor the trade- 
weighted exchange rate that 
reflected both stable domestic 
inflation and the different Infla- 
tion rate* of our diverse com- 
petitor* 

If the UK continued to inflate 
at 4 per cent per annum, the 
UK real exchange rate would 
be held constant — a far more 
important objective than stabil- 
ity of the nominal £/DM 
exchange rate. An acceleration 
in UK inflation, on the other 
hand, would lead to real 
exchange rate appreciation and 
g policy response to restrain 
demand growth back to a level 
consistent with stable inflation. 

Such an exchange rate policy 
ought, like the EMS, to be made 
explicit, with target bands 
determined by current and 
expected domestic a od foreign 
inflation. The stability and pre- 
dictability of the EMS could 
thus be achieved: a country 
with the UK’s favourable credit 
rating has no need of the extra 
intervention resources made 
available by ems membership. 

A constant-re al-exchange-rate- 
witb-cotistant-inflation policy as 
described would provide an 
excellent background to the 
pursuit of the microeconomic 
policies which might — in con- 
trast to the fixed nominal 
exchange rate policy— genuinely 
improve the UK’s performance. 

If, for instance, increased 
labour mobility reduced wage 
costs and UK costs began to 
decelerate, the 4 per cent infla- 
tion norm would result in a real 
depredation in the real 
exchange rate. The UK trade 
balance would improve, and the 
economy could be stimulated > 

The benefits of improvements 
In the working of the economy 
would then automatic ally be 
translated into employment 
gains rather than being 
frittered away on the dubious 
objective of yet lower inflation. 

The author it cMef economist 
at Schroder*, the financial ser- 
vices group. 


PROVMCEOFNW 


too Mai HK 


jMe» is hereby gtaq tot hmipearf to j 
imarorwMfciMlIwmWttfciBWt*. 
Oir, to Notoa* any « Mmn Rto W 
l Wfcpsr «sm.Th* sanwts avtot «n 
togw A IWatow Coapato. 13«« te 
Cn.SnUlfarBamrNoMcfCan.S8Un 

principal ■»** ■* Can. SOU far Baarar 

Note of Can. SUHO prindpal MnconL Can. 
SaSMMaparaNaanaaciiCanJUmpfo- ; 
cWato sCsl lMUfa is i l Mn* 

May 2t,1W 

THE CHASE MMSUlttN. BMKNA ^ 
lONDOUMGENTMIK. U 


The Financial Times is 
proposing publishing this 


LIGHT TRUCKS 

on 

MONDAY JULY 13 UB7 
For full details, contact: 
COLIN DAVIES 
on 01-248 8009 ext 3340 

FINANCIAL TIMES . 

EURDPESBUSMSSWWSWBl 

Thm content, »&• antf puMfcatfoa 
tone a 1 Survey* to Financial 

Timer are aubleot to change at Cha 
discretion of the Editor 


US $250,000,000 

Rggie des installations olympiques 

Floating Rate Notes Due November 1994 



UnconditionaHY guaranteed by 

Province de Quebec 


interest Rato 
Interest Period 

Interest Amount per 
US. 850,000 Note due 
20th August 1987 


7%% per annum 

26th May 1987 
20th August 1987 

US.897431 


Graft Suisse First Boston United 
Agent Bank 


US. $100,000,000 

Robert Fleming Netherlands B. V. 

Primary Capital Undated 
Guaranteed Floating Rate Notes 

guaranteed by 

Robert Heming HridingsXMted 


Interest Rato 

Interne Period 

interest Amount duo 
27th November 1967 
per OS. $10000 Note 
per ULS. 850,000 Noto 


8 7 /lS% per annum 

26th May 1987 
27th November 19S7 


LLS.S 43359 
U.S.8g.1B7.95 




Cradft Sate First Boston limited 

Agent Bank 


MOET-HENNESSY 

A French "Sodftf Anonym* “ 

Share Capital of 300 S3* 050 French Francs 
Registered Office: 30 avenue Hoche - 75008 PAMS 
Registered with the Registre du Commerce et des Sodfcfa 
under reference: PARIS 3 775 470 417 
US55OA0OA0O 7 per cent convertible bends doe 1999 

NOTICE TO BONDHOLDERS 


NOTICE . IS HEREBY GIVEN to _ ho^ar» ol_^a USS50.000,000 7_ gw^esnt 

caDfld on May 22nd 


Convertible Bonds due 1089 of MOET-HENNESSY by the Board of Director* 

— -> ot tha bo«J» oirtrandma 


of Hie Company, that the quorum of one qusrtsr of 
having not been obtained, the Genera] Assembly 
has been adjourned and a General Assembly (second I 
Bondholders Mill be held et tha regiatered office of MOET-HENNESSY 
30 avenue Hoche 7500B PARIS on June 10th at 11 JO am. to consider the 

(if^ln^ccoSance with the provisions of article IBB, per* 5 of the LAW 
of July 24th 1966. approval by the holders ol 7 par cant Convertible 
Bends due 1989 of the waiver by shareholder*, as provided with 
first resolution submitted to the Extraordinary Meeting ofrtarsftoMra 
called for May 22nd 1967. end. falling to attain the required quorum, 
postponed until June 4th 1987 of their preemptive rights to capital 
shares to be la sued by the Company under an employment stock 
option plan: . . _ 

(2) the granting of powers to third patties to carry out the necessary 

legal formilmes; . _ 

(3) the determination of the place where tha powers of attorney mum 
represented Bondholders and the minutes ol the moating, as wall aa 
the attendance list, will be deposited. 

No quorum is required for that second General Assembly. 

To be admitted to or be represented at the meeting. Bondholder* 
must deposit their Bond* five day* prior to the meeting win the Mlowfng 
paying agents where power of attorneys are available: 

W BANKERS TRUST COMPANY 

Daabwood House. 69 Old Broad Street LONDON EC2P 2EE 

BANKERS mUSTCOMfANY 

Corporate Treat and Agency Group.^Foor Albany Street. NEW YORK, 

SWISS BANK CORPORATION 
1 Aeschenvoremdt CH-40Q2 BASLE 
BANQUE INDOSUEZ LUXEMBOURG 


Holders of 
or represented at 
five days prior to the meeting. 


39 allte Scheffer. 1-2520 LUXEMBOURG 
Registered Bonds will only be allowed to be admitted to 
■t the meeting H registered on the reglern of Bondholders 


THE BOARD OF DIRECTORS 


bvener 


U.S. $100,000,000 

Floating Rate Participation Certificates Due 1992 
issued by Morgan Guaranty GmbH for the purpose of 
making a loan to 

Istituto per lo Svilappo Econonrico 
ddTI talia Mendionale 

(as&utory body of dtcRepubQcof Inly in corpor atc d undtr 
Lew No. 293 of April 11, 2953) 

Tn»wviTr Iw mv. ^ift^*ltr» terms and ct mrlrtinrw nf tha 
Gc ttificateB, fbe rate of interest for die I n terest Dc tenniiia lioQ 
period 26& May, 1987 to 26th June, 1987 has 

beenfixed at 7^6%. Interest accrued for the above 
period and payable on 27lfa July. 1987 will umOUHttO 
US$6835 per US$10,000 Certificate. 

Agent 

Morgan Gnaranty That Company ofNewYbric 
London Brandi 


KOREA FIRST BANK 
U-SJHMWUMO 
FLOATING RATE NOTES 
DUE 1995 

hi accordance wttto pwaian* elite Naim, 
notice b hereby tfwn to: tor the bsoreot 
Mod ton Hoy SS, i«? re Nowetor ». W7. 

toNntts wBcanyan haaremna of »M pw 

aanaBL Tha amosac peyaUo on Nawnbar S, 

nD agtonCiiopen Nc. 5HB ba USM207A7. 

Uay2XW » 

THE CHASEMANRATEON BANK KA. fl 
LONDON, ABENT BANK. 


Lloyds Bank Pic 

OsawtmoSlmB^dtMkSmMSataioi 

US$500,000,000 
Primary Capital Undated 
Floating Rate Notes 
(Series 2) 

For die three months 26th 
May, 1987 to 26th August, 
19*7 the Notes will carry an 
interest rate of 7.8125% p.a. 
with * 


TJjeQptguhffiiBBiiit, NA, 

T nmlm i *prt BbiE 


A 


tntoiing rijaffectS.- *. ' ~'k ~ . •' *• •'•v : ^ •*. » ; . 


5KANSKA 




Over the next few weeks the Swedish Annual Report 
Index will highlight key details from the latest annual 
reports of a series of leading Swedish corporations. 

Our first century has given us a legacy of proven skills, creative 
technology and financial strength. Skanska has become one of 
Europe's leading contractors. And as a truly global builder, we 
have established a reputation for handling advanced projects in 
more than 60 countries. 

We have bulJt hundreds of bridges and power stations, as well as 
sirperts, harbours and factories. And we have also produced 
rogdwayt. tunnels and subway systems that add up to thousands 
of miles. Plus millions of human habitats. From hotels, housing, 
hospitals and offices, to tourist retorts and complete turnkey 
communities. 

We have got the technical strength to meet any construction 
need. And with complete project responsibility, we are resourced 
to deliver the total package. Assurance, fully functional installa- 
tions and financial gains. 

Turnkey delivery it Skanska’s password for successful completion 
as well as fast, economic and reliable construction. On time and 
on budget has been our uncompromising pledge for 100 yean of 
civil engineering. 

This year we celebrate our first business centenary and present 
our 99th annual report. The Skanska Group reports 1986 revenues 
of SEK 16,103 million of which SEK 2.632 million were from 
outside Sweden. Consolidated income before allocations and taxes 
■mounted to SEK Ij 046 million. The adjusted earnings per share 
before extraordinary hems were SEK 755. The Group's equity/ 
assets ratio rose to 232 per cent. 


porathws featured here send 
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SWEDISH MATCH SAS 

Swedish Annual Report 
Promotion, Box 10020, 
S-I0055 Stockholm, Swedes. 
Attach your business card or 
please print. 


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ing one. .. . .. - • 

f - Our group comptises 3000 cade- 
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billion Finnmarks (5,1 billion US dollars.) 

We sell groceries, builders’ and 
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Financial Times Tuesday May 26 19S7 


Notice of Prepayment 

_ _ THE TOYO TRUST AND 
BANKING COMPANY LIMITED 

OnooipomtBd with baited BattBy In Japan) 

_ . U-S . $1 0.000.000 

Re d eema ble Nogotiabfa Ftoaflng Bate PoBar 
Certificate of Deposit No. 000021 to 000040 
issued on 20th Aina, 1963, 

Maturity 22nd June, 1988, 

. . Callable on 22 nd June, 1987 

Nonce is hereby given in accordance with the conditions of 
the above Certificates of Deposit (the Certificates') as 
printed on the reverse of the Certificates that the Toyo Trust 
and Banking Company, Limited (the ■Bank’) wffl prepay afi 
the outstanding Certificates on 22nd June, 1987, (the 
'Redemption □ate’) at their p rin cipal amount 
Payment of the principal amount, together with accrued 
interest to the Redemption Date, wD be made on the 
Redemption Date against presentation and stmender of the 
Certificates at the London Branch of the BartiCf 
Interest wffl cease to accrue on the Cerfificates on the 
Redemption Dale. 


1 tq yp_ 


Bockkrsbnry House, 5£h Floor, 83 Cupum Street, 
London EC4N8AJ. 


26th May, 1987 


Notice of Prepayment 

THE TOYO TRUST AND 
BANKING COMPANY LIMITED 

(incorporated with HmHadBabBty to Japan) 

U.S. $10,000,000 

Redeemable Negotiable Floating Rate DoRar 

Certificate of Deposit No. (XXXWI to 000020 
issued on 9th June, 1983, 

Maturity 13th June, 1988, 

Caflable on 11th Jiaie, 1987 

Notice is hereby given in accordance with the conditions of 
the above Certificates of Deposit (the Certificates') as 
printed on the reverse of the Certificates that tiie Toyo Trust 
and Banking Company, Limited (the ‘Bank 1 ) will prepay all 
the outstanding Certificates on 11th June, 1987, (the 
•Redemption Date') at their principal amount 
Payment of the principal amount, together with accrued 
interest to the Redemption Date, will be made- on the 
Redemption Date against presentation and surrender of the 
Certificates at the London Branch of the Baltic 
Interest will cease to accrue on the C er tificate s on the 
Redemption Date. 


■ Buckle rebury House, Sill Floor, 83 Cannon Street, 
London EC4N 8 AJ. 

26th May, 1987 


Dansk Eksportfinansiermgsfond 

(Danish Export Finance Corporation) 

( Established with limited liability r in the Kingdom of Danmark) 
Issue of up to U.S. $200,000,000 
Floating Rate Notes Due 1995 
rf»|iHiTT.s.sigi 1 sM l nnnhi«mghmi.iM «i^fciHbi(, am l if 
Notice is hereby given that the interest payable on the Interest 
Payment Date, June 22, 1987, for the period December 22, 1 986, to 
June 22, 19B7, against Coupon No. 4 in respect of U.S. $10,000 
nominal of the Notes will be U.S.J340.19 and in respect of 
U.S.5250,G00 nominal of the Notes will be U.S.$8,504.75. 


May 26. 1987, London _____ _ ' ^ 

By: Gtibank, NA. (CSSi Dept), Agent Bank GF77BAAKO 


US. $600,000/100 



Commonwealth of Australia 

Floating Rate Notes Due 1998 


Interest Rate 7 1 ^16% per annum 


Interest Rate 
Interest Period 


28th May 1987 
Z7th November 1967 


interest Amount due- 
27th November 1987 
per US. $ 10,000 Note ULS.S 401.48 
per US.S600J)00 Note U.S.$20,073J8 


Crafit Suisse First Boston TJmftwl 
Agent Bank 


Deutsche Stedknga- 
u>d Lande si eraan b ank 
Borm/Berfn 


DM 100 000 000,— 

Boating Rate Notes 
ScfKridverscfwefliimgen — Serie 228 
1987/1997 



For file three montits 29h May 1987 to 24th August 1987 the notes 
wM cany an Interest rate of 3,65% (Ffeor less 0,10%) 
per annum with a coupon amount for DM 45/33, per DM 5000, — note. 
The relevant Merest payment data wtfl be 29h August 1887. 

Listing la POWdo rf and Frankfurt 


Deutsche SteAsve- and Lsndesn 
Ke nn e d y eB ee 62 — 70, 5300 Boon 2 
T e l e ph o n e 0228/ 889-215 



CONSTRUCTION 


Refurbishing Watergate 


TRAFALGAR HOUSE CON- 
STRUCTION MANAGEMENT 
INC (TOCM) has been 
swarded the management 
contract for tee £10m refur- 
bishment of one of Washing- 
tort famous hotels — the 
Watergate Hotel — located 
an the banks of Am Potomac 
River. Awarded by Buddng- 
ham Holdings Inc, Invest- 
ment arm of one of the 
hugest UK pentdon tends — 
that of British Coalr— the 
jlv Ject encompasses the com- 
prehensive revamping of Ibis 
beteL 

The W a t ergate win be 
operated by Canard Hotels 
and Resorts Inc. There are 
239 rooms of which there are 
91 guest rooms, 68 George- 
town suites, 160 executive 
suites, 13 dfetantt suites, 12 
pre si de nti al suites and 1 
royal suite. During refurbish- 
ment the hotel win continue 
to operate. Hie works pro* 







gramme generally ij o uiprlKl 
decorations, fittings, and 
some minor demolition 
and co n str u ction. The re- 
furbishment style win be 
classically gngbh, »»»^ Mm 
lobby and r e ce p tion areas win 
be mnrbfa dad with fluted 


red wood doric columns. 
Apart front toe guest rooms, 
nearly 27,600 sq ft of pubUc 
areas will be upgraded. 
These lndnde two restaurants, 
conference and banqueting 
faculties and the health and 
fitness dub. 


Polly Peck’s Turkish hotel 


US $125,000,000 



BANK OF BOSTON 
CORPORATION 

Floating Rate 

Subordinated Notes Due 1998 


. -> W-ln 

interest rtste 

Interest Period 

Interest Amount per 
U.S. $50000 Note due 
26th August 1987 


7.875% per annum 

26th May 1987 
28th August 1987 


U^. $88069 


Credit Suisse Ffcst Boston limited 

Agent Bank 


CEMENTATION INTERNA- 
TIONAL, a Trafalgar House 
company, has been appointed as 
the construction manager for a 
de luxe five-star hotel worth 
$S4m (£20 ,3m) at Antalya, Tup 
key, by Polly Peck International. 

The hotel will be constructed 
on a flve-hectre site overtooking 
the Konyaalti beach and a 
Mediterranean coastline set 
against the backdrop of the 
Toros Mountains, ft win pro- 
vide tourists (tor 10 mouths of 
the year) with the opportunity 
of being Ale to swim and ski 
within a few hours' drive. 

Antalya Is considered one <4 
Turkey's most beautiful regions 
and is eteeped in history. The 
area abounds -with breathtaking 
scenery and antiquities Includ- 
ing tire Perge ruins known as 
the rains of the Queen of Sheba. 


Nearby at Aapendos is the 
world’s largest Soman amphi- 
theatre which holds 20,000 
people and Is gtiXL used to this 
day. 

Designed by architects YRM 
International in association with 
Poly Peck International's archi- 
tects’ department, the hotel will 
provide first Claes facilities for 
tire increasing numbers of 
tourists which are visiting the 
region. 

The eigrt-storey hotel will be 
constructed over a 27-month 
period In three wings with a 
feature atrium and will stand 
«o a rocky cliff with its own 
private beach below. A cable car 
will cany residents to and Iran 
the hotel and beach. All guest 
rooms wdll have panoramic views 
and are being bitilt to larger 
•Turn normal dimensions. There 


will be a total of 600 rooms, 
feirtmttng 16 suites. 

Apart from the usual facilities 
of restaurant, coffee shops, ban- 
queting and conference rooms, 
patisseries, shops' and heated 
swimming pool, there will also 
be extensive sport and leisure 
facilities including a golf course, 
an international casino and a 
discotheque. 

Trafalgar House companies, 
TJL Engineering Services and 
Y-A.Y. International, are respon- 
sible respectively for the civil 
and structural design and the 
mechanical and electrical design. 
Mr Armagan Tekvar, group archi- 
tect for Polly. Peck, comments: 
“This hotel project is die first 
in a series of international 
leisure developments which Folly 
Peck is planning." 


Extending Nissan’s factory 


SIR ROBERT McAWINE ft 
SONS has begun work an a third 
design and management c ontra ct 
worth £8£m, f or N issan Motor 
Manufacturing (UK) covering a 
farther extension to its new car 
assembly plant at the former 
Sunderland Airport site, Wash- 
ington. 

Work on the contract, doe for 
completion in March 1988, com- 
prises a 234 metres by. 36 metres 


extension to the paintshop to- 
gether with separate paint mix- 
ing and storage buildings and 
associated parts storage areas, 
construction of a plastic injection 
■hop 90 metres by 90 metres and 
alterations to access roads. The 
new aingleetorey buildings will 
be of steel-flrame construction 
and clad with composite steel 

pnnalg to . »■»*»* «*Th*t j ug build- 
ings. 

The extension will enable 


Nissan to increase production by 
more 20 per cent from 
24,000 to 29,000 cars per year 
which win provide 300 new jobs 
In addition to the 270 extra jobs 
already planned. This will more 
than double employment on toe 
Nissan production lines from 530- 
1,100 by tire end of 1987 and will 
Involve tire introduction of a 
nt ghtaUf t in November — some 
eight months ahead of Nissan's , 
'original programme. 


r |- irnnfl i r — — ; 

CRENDON 

tfi-Spac Structures 
for 

M-Tach Industries 

CH ENDOW STRUCTURES UMJTEO 


AMEC to 
build for 


Digital 


AMEC PROJECTS, part J* 
AMEC constaraaBion group. 
won a £ 30 m management con- 
tract (D 1)0011 the Digital 
Eqiflpmeot Company I* new 
send-oondurtnr teotosy. y . Sou i ,, 
Qiuaeneftsry. near Edtaburg- 

writes Joan Gray, construction 
svufMde until toe cqrttraet is 

foanauy signed. altooughAM^ 

has received a firm totter ot 
intent from DI gtol . 

Digital, a US computer manu- 
facturer, announced *" 
January this year that its 
plans to build a 1 new silicon 
whip plant at South Queen s- 
ferry — a total investment then 
estimated at £85m — were a 
year behind schedule as a 
result of major design changes 
to allow greater manufacturing 
flexibility. 

But tbe company then said 
it hoped to begin construction 
on the site this summer for 
toe plant to come Into opera- 
tion in 1989. 

AMEC Projects is the group s 
specialist management contract- 
ing subsidiary, with particular 
experience in high technology 
projects and in contracts where 
major design changes need to 
be incorporated in the course 
of the work. 

It has been involved in five 
large high technology schemes 
in the past two years, building 
production facilities and clean 
rooms 


Resurfacing 
RAF airfield 

The Property Services Agency 
has awarded BALFOUR BEATTY 
CONSTRUCTION a third con- 
tract at RAF Honington, Suffolk. 
The two previous contracts were 
for hardened aircraft shelters 
This latest contract, valued at 
£52Sm, is for resurfacing run- 
ways, taxi ways and hardstanding 
with Sfnruhall asphalt Overslab- 
bing of runway ends and hard- 
standing with P.Q. concrete, 
markings and otoer minor works 
are included. Completion is . due 
by toe end of December. 









The quicker a tablet 

breaks up, 

the quicker it acts. 


. \ ■ f V 


S; 


i-r 

be? 


?■ 

i&r f , 




















r 


* Fin a nc ia l Times Tuesday May 26 1987 


La traviata/Glyndeboume 

Max Loppert 


. 


THE ARTS 




There axe strengths — {nomi- 
nating psychological insights, 
skilful stage pictures, shafts of 
trenchant social criticism, 
moments of fragrant Verdian 
beauty — In the new production 
of La txaoUda, Peter Hall's and 
Bernard Haitink’s first, that 
launched the 1887 festival 
season on Sunday. But you had 
to -work -rather -too hard -to 
winnow them out from the 
dross, the dominating heavi- 
nesses and clumsinesses, that 
appeared uncomfortably plenti- 
ful during a more than usually 
nerve -wracked Qyndebonme 
opening performance. 

There are many- reasons why 
of all Verdi operas La trewiata 
is surely the one most suitably 
housed in this theatre. Perhaps 
the most profound personal 
tragedy that the medium has 
ever produced, it is essentially 
an in tima te piece, closely 
worked, and scored with 
devastating spareness. Every- 
thing that makes it a great 
opera should properly be' 
enhanced and emphasized at 
Glyndeboume; yet for too much 
of Sunday’s performance an 
opposite process seemed to be 
under way. 

Certain faults of execution 
will no doubt be corrected 
during the run. Haitink’s un- 
characteristically heavy-footed 

tread through the score must 
lighten, and his hard driving 
of the LPO and the singers in 
the Act 2 finale must lessen. So 
too the u oversin ging" of Marie 
McLaughlin in dramatic out- 
bursts (no doubt under 
pressure from the conductor), 
and the resort to big-house 
volume-production by Walter 
MacNeU (Alfredo) and 
especially Brent Ellis as hie 
father when the theatre itself 
invites and encourages refine- 
ment, subtle nuances of tone 
and verbal delivery, exquisite 
economy. Prom an aisle seat 
much of the action seemed 
badly blocked — not to see 
Violetta’s face during “Am ami 
Alfredo ” is a cruel deprivation 
—but this should sort itself out. 

But whether there will then 
be revealed a convincing sum 
total to the Glyndeboume 
Trrwtete la harder to determine, 
even after every first-night 
excuse has been recorded. It is 
handsomely. set and detailed by 
John Gunter: a Manet dinner 
party; a tasteful living room of 
a maubh de province (with 
beautifully delicate lighting by 
David Hfersey to throw beams 
from the rear. conservatory); a 
roseate Second Empire amuse- 


ment room (the divertissements 
become a witty and apposite 
demonstration of period male 
prurience) ; a bedroom cluttered 
with the portrait-reflexions of 
Violetta’s -past. 

HalTs wonted fidelity to the 
text produces some glanatagiy 
intelligent aperpus (in the open- 
ing scare Violetta coughs blood 
into a handkerchief, then .tosses : 
it hastily . away; Annina — ' a 
brilliant cameo by Enid. Hartle 

— seizes with delight the letter i 
addressed to her mistress's 
former wealthy protector). 
Clocks, skulls, and masks place 
a subtle chain of memento mori 
m o tifs . The bourgeois rectitude 
of Germ out p6re La mtflwmhina i y 
presented. 

Elsewhere, however, a static, 
inert quality settles on the 
drama. For a Peter Hall pro- 
duction the amount of business 
devised to incommode a singer 
— Violetta extinguishing candles 
and overfilling wineglasses 
daring her Act 1 scene, Alfredo 
laboriously cleaning a gun while 
■singing of his “bollenti spiriti" 

— is extraordinary copious. And 
relationships, the nub of La 
tnxviata, remain ill-defined: Mr 
MacNeil, son of the eminent 
American baritone Cornell Mac- 
Neil. has a pleasantly fresh, for- 
ward lyric tenor and good 
Italian enunciation, but on Sun- 
day his Alfredo was more or 
less a blank. 

• U is in its heroine that this 
production offers greatest 
grounds for optimism. On Sun- 
day the McLaughlin Violetta 
was still only a sketch. She 
needs to think particularly hard , 
shout her first appearance 
(girlish party spirits are not the 
full story at this point in the 
character’s history), and to jerk 
around less energetically in the i 
last act It was a pity she 
refused us the second verse of 
44 Ah! fors’e hri" (a complete, 
uncut Traviata fait had been 
promised) to match both verses 
of “Addio del passato," ; 
interestingly and movingly sus- 
tained. 

The dark hair, luminous big 
eyes, and quicksilver courage 
of this Violetta are on the right 
lines; no less so the lustrous 
beauty of the voice, which with 
each new role grows surer, 
tuner, and more firmly pro- 
duced in all registers, in “Hite 
alia giovine " the control of fll 
di voce, swelling dynamic range, 
and an immaculately placed 
soft -high conclusion provided 
the .evening’s only . really 
authoritative affirmation .pf. the 
Verdian di wm w B pcr tw aairu . 







Marie McLaughlin, David HlDman and Walter MacNeil 



Josephine Barstow 


AlatUlr Muir 


Lady Macbeth of Mtsensk/Coliseum 


In mounting the long-delayed 
British stage premiere of 
Shostakovich's Lady Macbeth of 
the Mesensfc District, English 
National Opera have gone all 
out for a smash-hit sensation. 
And achieved their goal several 
times oven Friday’s per- 
formance was probaly one of 
the most sheerly loud evenings 
at the Coliseum in the com- 
pany’s history— also one of the 
most riveting, most expertly 
and brilliantly sung, played, 
staged, and acted. It was, there- 
fore, an experience at once 
exhilarating; exhausting, and 
disquieting. The work itself is 
all those things, of course; bat 
the focus and style of the pro- 
duction also left room for vari- 
: jnxe kinds of disquiet, not all of 
them generated by Shostakovich 
himself. 

Since the troubled perform- 
ance history of the opera itself 
has direct bearing on Important 
aspects of David jPmmtney’s pro- 
duction in the designs of 
StefanosLazaridfe (yet another 
ENQ tritfmphifdr him), it "needs 
tu be taeUy repeated here: The: 
work had its premiere in 1934, 
and an initial run of successful 
performances; then - Stalin 
encountered it, was outraged by 
It. and denounced it (in a 
famous Pravda editorial 
inspired by even if not actually 
by, the dictator himself) as 
“fidgety, screaming, neurotic 
music.** 

The oprea was withdrawn, 
and Shostakovich’s operatic 
career c nTn< * to and end— though 
in the late 1950s he did revise 
Lada Macbeth as Katerina 
Izamylova, toning down the 
uninhibited language verbal and 
musical, the riproaring stage 
incursions of a brass band, the 
scabrously graphic sexual depic- 
tion, that had touched Stalin to 
the quick (it was this revision 
that had its British premiere at 
Covent Garden lh 1963). " 

Stalin’s response, though 
tragic in its consequences — 
for Shostakovich personally, for 
the course of Russian opera, for 
the freedom of Soviet artistic 
expression— was not essentially 
inaccurate. Lady Macbeth oj 
Mtsensk is one of the most “ex- 
| treme ” of 20th-century operas; 
provocation was indeed in- 
tended. The Shostakovich who 
bad fledged his theatrical genius 
on the comic surrealism of The 
Nose, who in his early music 
had brushed creatively with the 
steelman d-smoke Futurism of 


Max Loppert 

Mossolov, the enfant terrible 
high jjinks of Prokofiev, the 
highly-wrought Expressionist 
angst of Berg’s Woxzeck — it 
was this composer who came 
face to face with the Russian 
narrative tradition as embodied 
in ikolay Leskov’s short story. 

The opera is not just a con- 
catenation of comic, brutal, or 
grotesque outbursts; the 
lyrical laments of Katerina her- 
self, framing the whole work, 
and the deep strain of compas- 
sion exposed by both female 
domestic suffering and prison- 
camp oppression, make it a 
huge, complex, many-sided 
experience. (Shostakovich said 
of the open* “It is ... about 
love, also about how love could 
have been if the world weren’t 
fuQ of vile things’*.) But the 
method of the score, with its 
frenzied .ostmatos and wild 
set pieces. Is to nib hard against 
the Russia realism Of the plot — 
and, so doing, to rub an 
audience’s sensibilities raw. 

Instead of ensuring the 
fraught balance. . ‘betweeq 
“ modernist " music and : rea- 
listic narrative, Bountney has 
overthrown it The. production 
Is a remarkable piece of stage- 
craft glittering, endlessly in- 
ventive, slickly set in motion 
(stage and pit were not always 
together last Friday, but that 
will surely improve). 

The set is a massive metal 
structure of ladders, ramps, 
and walkways, with a giant 
wheel dominating the left side; 
rotting meat carcasses hang 
from all points; a central re- 
volve spins. The action is 
pivoted upon the prominence 
of psychologically resonant 
images. The early decades of 
film dominate the mechanised 
chorus movement; Chaplin, 
Keaton. Fritz Lang and Clair 
ire constantly evoked. Absurdi- 
ties are vigorously underlined. 

After a while, the mirroring 
on stage of every ostinato pat- 
tern becomes wearisome. More 
troublingly, Pountney (also pro- 
vider of the fine new transla- 
tion) has updated the story to 
the opera’s own period, and 
reworked the prison camp to 
hold the number-carrying 
vidtims of Stalinist purges. 
The epic outdoor bleakness of 
the finale Is lost; worse, the 
producer's nudging-out of 
these showy . Life-and-Art 
parallels dilutes both the wider 
social criticism and the compas- 
sion. Not for the first time, one 


Billy Budd/Theatre Royal, Glasgow 


starts to wonder whether 
Pountney’sgift for stage 
animation has ran away with 
him. 

Ail this said, the ENO Lady 
Macbeth is a Show no London 
theatregoer can afford to miss. 
Mark Elder conducts with 
superb authority; his mastery 
of the idiom is evident not just 
in the passages of furious satire 
but no less in his sustaining of 
the gaunt lyricism — the music 
has also its dangerously hare, 
plain moments, which he never 
allows to sag. 

The cast is tremendous. Sally 
Burgess, Alan Woodrow, Stuart 
Kale, and Maria Moll (among 
others) give virtuoso accounts 
of their smaller orles. Willard 
White as Katerina’s brutal 
father-in-law sings and acts 
with marvellous strength, 
though his physical presence 
remains obstinately attractive 
(more extensive makeup might 
help here). The American 
Jacque Trussed remembered 
from the Welsh National 
Carmen, prorides both a hand- 
somely virile figure and a brave 
tenor (the vocal lines of the 
original version lie punishingly 
high) as the seducing Sergey. 

And, if there were no other 
reason to praise the perform- 
ance, Josephine Barstow as 
Katerina would still make this 
a production in a million. Over 
the years I have strained every 
descriptive resource attempting 
to hymn the special qualities of 
this passionate, courageous, 
musically and dramatically pro- 
tean performer. Epithets 
threaten to run dry over Shosta- 
kovich’s great title role, surely 
among her very finest achieve- 
ments. The discipline of voice 
and body, the command of 
intense stillness (which acts as 
a mute reproach to directorial 
over-busyness), the sharpness 
of inflestion: in these thhings 
alone the Barstow Katerina is 
a lexicon of the singer-actor’s 
art There is, after all, compas- 
sion in this Lady Macbeth, with 
such a performer at its centre. 

Open Air Theatre 
in Regent’s Park 

The Open Air Theatre. 
Regent’s Park, season opens on 
June l with Ben Jenson's 
Bartholomew Fair, to be fol- 
lowed by A Midsummer Night's 
Dream on June 17 and Two 
Centime n of Verona on 
August 4. 


The electrifying new produc- 
tion of Billy Budd that opened 
on Thursday in Glasgow, 

continues the revival of 

Scottish Opera fortunes 

as already evidenced In 

its current Silver Jnbilee 

season. It is very much a home- 
team effort: John Maucezi, the 
company’s music director-elect, 
conducts; Graham Vick, director 
I of productions, stages the opera; 
the cast is foil of British 

operatic talent. The total is one 
of the strongest statements 
about this deeply disturbing and 
equivocal work — grand opera, 

; historical epic, domestic 
tragedy, and symphony for 
men's voices all in one — that we 
have seen and heard. 

There are two opposite views 
j about the opera: the special 
strength of Mr Vick’s production 
in Chris Dyer's designs is to 
afford the spare, directly 
focused means of matching and 
even reconciling them. The first 
-—the central battle of good and 
evil, innocence and corruption 
—is of course a much-di s cu ss ed 
Britten theme. 

The second is one rather less 
overt in text and music, but 
which tiie passage of time 
reveals with ever greater 
clarity: a study in vicious social 
repression, of naval serfs by 
their overlords, in which Clag- 
gart can be seen as much a 
victim of the “system” as those 
he victimises, and in which the 
death of the forgiving Billy 
leads to a deeply depressing 
reaffirmation of the status quo. 
This is not a view that Britten, 
Forster or Eric Crazier might 
admit to or even accept (in a 
sense Billy Budd is Britten’s 
first Tory opera); yet the work 
proves ail the richer, and the 
music all the more overwhelm- 
ing, for the troublesome, con- 
tradictory aspects one can find 
in it— as this production Indeed 
does. 

The single set, a rugged metal 
construction, is also a single 
dominating dramatic image — a 
ship seen in transverse section, 
layered in deck levels, pivoted 


Max Loppert 

on a central mast, and contained 
like a globe or crucible. The 
"whole world” of Vere’s floating 
monarchy (or slave ship, which 
is what it is) is ceaselessly 
evoked In the action — the 
physical detail of the production 
la at once economical and stun- 
ningly vivid — and with it the 
hideous violence that runs 
through the drama like an open 
sore. 

Few opera performances so 
fully catch a sense of com- 
munity; in the war-hunt the 
general exhilaration of battle is 
set, by the simple drop of a 
great British flag, in a precise 
context of irony. The one tex- 
tual licence — the appearance 
of a dressing-gowned alter ego 
of the old captain haunting the 
main action like an agonised 
conscience — does wonders in 
filling out and (as far as pos- 
sible) mitigating the extraordi- 
nary behaviour of the opera's 
central character. 

Billy Budd. like The MoJtro- 
potdos Case, is a difficult opera 
to which all companies always 
rise with their best efforts; even 
so, the power and punch of 
Thursday’s performance marks it 
out as something special. At the 



Mark Tinkler 


head of a faultless cast is Philip 
Langridge, whose Vere ranks 
alongside bis Idomeneo as an 
unforgettable study of an opera- 
tic ruler fraught with fatal 
weakness: every note, word, 
glance has its individual shade 
and pointing, yet the portrayal 
is never in the least fussy or 
artificial. 

John Tomlinson's Claggart is 
very strongly sung (except per- 
haps at the top), and lived from 
within — the physical stiffness, 
a product of class and sexual 
tensions alike. Is quite bril- 
liantly relayed. Mark Tinkler, 
fresh out of the Royal Northern 
College, where he first took 
Britten’s title role, has in con- 
trast a more genuinely free and 
natural physical command of 
the part than any other Billy of 

my experience though at times 
bis voice still lacks forwardness 
and clarity of projection. 

Around these superb central 
contributions too many others 
demand mention — that is always 
the case with a successful 
Billy Budd, Peter Knapp (Red- 
burn), Andrew Shore (Flint), 
Henry Newman (Donald), 
Donald Stephenson (Red 
Whiskers) and John Tranter (a 
splendidly truculent Dansker) 
are outstanding: Paul Harrhv's 
painfully soft, sweet Novice 
was sung with a chest infection 
but made its mark all the same. 

Mr Mauceri draws from his 
orchestra and chorus a wonder- 
ful brightness and resonance of 
sound (except, strangely, in 
the famous culminating 
sequence of 34 chords, which 
on Thursday was oddly untidy). 
He seems to have a particular 
feeling for its open-air side, its 
Gershwin and Delius echoes; 
this leads him to draw out Act X 
in what some might feel to be 
too leisurely a mood; for me, 
the dramatic movement never 
faltered. To bear this opera in 
a theatre of medium size and 
perfect acoustics is to be left 
—beyond all passing doubts 
about content or meaning— with 
a profoundly renewed sense of 
Britten’s musical genius. 


Drottningholm in Brighton 


This year's Brighton Festival 
has been ornamented by an 
exhibition from Gustav HTs 
Drottningholm Court Theatre, 
a delightful royal folly to 
match Brighton’s own. After 
Gustav’s impeccably operatic 
assassination in 1792 (at Verdi’s 
“masked ball”), the theatre 
was Closed and the building put 
to indifferent purposes; ISO 
years later the stage machinery 
and many original sets proved 
to be rescoable* and Since then 
there has been regular period 
opera at Drottningholm. 

It was natural that modem 
advocates of “authentic” play- 
ing style should covet Drott- 
ningholm for full-dress recrea- 
tions. Charles Famcombe pro- 
moted Handel opera there, and 
now Arnold Ostman has become 
artistic director, pursuing 
“ period “ ideals assiduously. 
The Brighton Festival had the 
excellent idea of inviting him 
(with sponsorship by Brighton 
Marina Village) to bring two 
Drottningholm Mozart produc- 
tions to their own not dis- 
similar Theatre Royal— with 
pretty much the young Swedish 
home team, not the starry casts 
who appear at Gustav’s palace 
in high summer. 

Some expectations were dis- 
appointed. The Theatre Royal 
stage lacks Drottningbolm's 
depth (was that why we were 
denied the onstage bands for 
Don Giovanni’s party-) and also 
its friendly acoustic; Brighton’s 
plush is no substitute for warm 
Swedish wood, and its dulled 
Ostman's soft-voiced instru- 
ments. The sour toning widely 
remarked at the first Don Gio- 
vanni was cured by the third 
performance, which I heard, 
but in sustained music the 


David Murray 

strings were woefully dim — 
especially in Idomeneo, which 
is less enlivened by woodwinds 
than Giovanni. It is one thing 
to avoid Romantic expressive- 
ness, quite another to eschew 
expression altogether. For the 
Prague premiere of Giovanni 
Mozart had an orchestra no 
bigger, but it must have been 
Stronger. Nor did the chorus 
in Idomeneo carry its weight. 

Ostman's preference lor brisk 
tempi is notorious. In general, 
I have no doubt that it is 
sound, and that we too often 
turn a Mozart or Haydn An- 
dante into an Adagio; but it is 
perverse to make Ottavio and 
Anna gabble their grieving-but- 
rsolute duet after the Commen- 
datore’s murder, and to take 
“ Ho cap! to" at a speed which 
your Masetto can barely 
manage. Yet both the great 
Giovanni finales delivered the 
authentic frisson of Mozart 
music-drama * which many a 
Giovanni doesn’t; something 
was seriously right. There 
were many bright, mostly un- 
showy ideas in GO ran Jfirvefelt* s 
frankly modern production 
(under-reviewed, I think; per- 
haps tiie first night was in dis- 
array), one of them being to 
make Giovanni increasingly 
wild and self-destructive right 
up to the fateful arrival of the 
statute. 

Magnus Unden&n’s hero 
needed that theatrical kick, for 
the role was sadly under-sung: 
a robus “champagne aria ” 
(sans champagne, praise be) 
was small compensation for 
hours of ill-judged mezza voce 
that failed to carry, laced with 
moments of parody-honeyed 
cajoling and toneless recitative. 
Far nearer the mark were Mal- 


vina Major's mature, stylish 
Donna Elvira and Hitlevi Mar- 
tinpelto's generous young Zer- 
lina. and the looming stature of 
Bengt Rundgren’s Commenda- 
tore was matched by his rock- 
solid delivery. 

Young Petterl Salomaa’s pro- 
mising Leporello is too casual 
and indulgent as yet to extract 
the best from his music. There 
was more cultivated promise 
in Stefan Dahlberg's keen, 
bright-voiced Ottavio, and 
Ralmo Laukka’s Maetto was al- 
ways intelligent when not 
rushed off his feet. Clany 
Bartha's Donna Anna was like 
the Bia and Electra of Anne- 
Christine Biel and Anita Soldh 
in Idomeneo: attractive timbre, 
well-schooled phrasing, the 
merest hint of aligning the 
vocal thread with character and 
situation. 

There was enough creative 
Involvement in the Don Gio- 
vanni performance that I was 
very glad to have seen it, and 
there were many passages in 
which the antique instrumental 
voices discovered new point (as 
often they do). Idomeneo is a 
tougher nut, and unlike JSrve- 
felt, Michael Hampe aimed at 
a stately production which 
might respect the presumed 
limits of the original, little 
in the stage movement gave 
positive support to the action 
but the flowing side-to-slde 
rushings of the chorus iu the 
storm-and-sea-monster scene 
(dampened by a clumsy back- 
cloth of Neptune's head— most 
of the Drottningholm drops 
were prettier and apter). The 
serious burden was thus placed 
npon pure singing, upon which 
Idomeneo makes rigorous, 
grownup demands. 


Arts 


May 22-2 8 


Obituary /Hermione Gingold 

Michael Coveney 


Opera and Ballet 

LONDON 

Royal Open, Covaot Grdmv Taran- 
dot. oao of tbo bouae’i tbo*t success- 
ful and enjoyable production! efre- 
o«t yams, c o n t i nu es in sspartay, 
with Ev* Marion (May 23) and Owr 
neth Jones (23) in the ttt* tale. And . 
Jacques Ddsaote as conductor. Wer- 
tber, a pretty-pretty Jbba Copay 
production of Mswnafa Open, is 
revived to ip trad u oe Frantavcq Aral- 
a Batten to London in 

Mtsensk, in a new pro du c ti on W- 
David Pountney conducted by Mark 


. . .every working 
day, if you work in 
the business 
centres of 
COPENHAGEN 
orAARHUS 

//•Copenhagen 

^/(OU 134441 

And ftsk 

K. Mikael HeiniO 
for details. 


I2der, odds another key Russian op- 
era to fhe company's reperto r y. 
Josephine Barstow, Jacque Trnaael 
and WiRard Whit* toad the large 

east 

Also in the sdwchd*: Don Glovsnni, 
tod in Uvdy fashion by WHHam SM- 
msD. Richard Von Allan, and Rita 
niWy sod the CteaUdcnfe de- 
signed Orpheus hi toe Und erwor l d, 
martssfe&e tor elaborate, fantastic 
sett than tar ahy very authentic 
— w— of Offenbach wit or satin. 
(SS831B1). 

PARIS 

Dsr VDscaade HaUndcr with Marek 
Jaoowski/Q ir itaophe r Perick con- 
ducting toe romantic parabola on 
the safitude id toe artist in society. 
Paris Optra (42M5S22). 

Spectacle Ecott da Dmnm presents 
The Two Pigeons followed hy Sofia 
ea btanc in hommage to lifer 

at the Optra Comiqoe (42860011). 

Ballet Antonio Gadas at the Palais 
Das Congra* (42*33875). 

Mam Odnnfegfaan Daaea Company 
with bis radically modem c onocp - 
tins/rUAtre de la V5D* (42742277). 

HEIWILANDS 

Amsterda m, Morinktheater. The Neth- 
erlands Open with PoecmFa Mad- 
ame Butterfly directed by Monique 
Wagemskers and designed by Her- 
mann Sabcnr. The Netherlands Phil- 
harmonic conducted by Incas Vis, 


FINANCIAL TIMES 

\ a t»* 


Frtuooo Ftzi&A (PiBbitOBii Judith 
irhptetin (Suzuki),- And Material 
DonaDy ' (Sh ar p i es * ). (Thnr). 

Tbm Ntdprianrts Opera touring com- 
pany with the Barber of Seville di- 
rected and d esi g n ed by Dario -Fh 
the Netherlands Philharmonic con- 


ducted by Stephen Barlow. Kathryn ! 
Cbwdrick (R ori n aX-Yo ririhi s a Yama- 
ji (Ahnaviv*), -and David Mafis (£V I 
gara). Toe in Tflbsrg, Sduanbmg I 
(432820). 

SchevemfegH^-, Circus Theatre. The 
Nededands Danoe Thebtro. with the 
Netherlands Battet Orchestra under 
David PorceUJn. World premieres of 
ballets by Jonathan Tayter, Nacfao 
Dnato (to RavCTa Bolero) and Syna- 

■ ffimto/Xeutkii, Yangmud 

frhnt). (338800). 

SPAM 

Madrid. PucdnTs 11 Tittflcb with Vlad- 
imir Afiantov, Joan Pons, Diana So- 
viero. Iolanta Badek. An own pro- 
dnetion. fir s t tim e in Madrid. Teatro 
la Zarzuela. JbveOanos 4, (Wed). 

NEW YORK 

American B riBct T he atre ( Metropofr- ~ 

UwSw^t TVhiH ^wliy ; 

director Mikhail Baryshnikov re- 1 
< h tk Inr Am> lyriwg nwimn of >niwl [ 
ii i m miw ii m including mu m iw 

premieres of Sunset cboreoraphed 


by Jtonl Ttetor to E2gfer and Enough 
Said, Clark llppefs choreography 
to George Parle's v"*** 

Cen tenEods Jon 13. (3826000V 
New York Otj Ballet (New York State 
Theater): More than 40 works by 
Balanchine, Peter Martins 

and other choreographers nfll be 
part of the two-month-long 88to sea- 
son, including two new works by 
’ MgfHmi fa Mn Tnrrpf fw Hlmtol aw[ 

Michael Toriee. En ds June 28. Lin- 
: coin Center (780 5570). 

TOfevb 

Australian BallM Company. Dm Quix- 
ote. (Tokyo Bunks Kaiken (Toes, 
Wed). (3733588). 


Music 

LONDON 

Rayal FU&armmte Orchestra con- 
ducted by Nich o las Qfiobury with 
Andrew WOde, piano. Rossini, Bizet, 
Rachmaninov and Dvofdk. Royal 
Festival Hall (Mon). (8283191). 

InadlW S wnnhmw 1 ThTlMSlIS mrwftii-t. 

ed by Leonard Station with John 
T.iTl, pawn- fUmlra, Prokofiev and 
Tchaikovsky. Barbican Hall (Toe). 


BBC Welsh Symphony Orchestra con- 
ducted by James Loughran with Pe- 
ter Daoohoe. p*w» nHnv« Proko- 
fiev end Tchaikovsky. Royal Festiv- 
al Hal! (Toe). 

London Bach Orc hes t ra directed by 
Tessa Bobbins Khambatta, violin. 
Bach, HSndel. Haydn snd BottesinL 
- Queen Elizabeth Hall (Toe). 
(0283101). 

PWlheramria Or ch e str a sad Chorus 
fmiinrfyi by Biecerdo Pf f . 
thoven. Royal Festival Hell (Wed). 

Royal fhflhannnnlr Orchestra con- 
ducted by t h ri y Batiz with Julian 
Lkyd Webber, 'ceDo. Dukas, Elgar 
and Tchaikovsky. Royal Festival 
HaR (Thor). 

Academy of St. Mwtfa-te-the-ndds 
directed by tons Brawn. Mozart, 
Schoenberg and Tchaikovsky. 
Queen Elizabeth Hall (Thnr). 

PARIS 

Baroque Music: Gluck’s Armlde in 
concert version, Tafelnmsik Ba- 
roque Orchestra end Ensemble Vo- 
cal de la Chapefie Boyale - Paris 
wvmWtwi by Alan Curtis with 
Montserrat Caballe (Mon, Wed) 
TMP-Chatdet (42334444). 

I HSndeft Oratorio Theodora. English 
! version, rfnrft»‘ teH by Jeaa-Gtaude 


Mnlgoire with toe Tallis Choir 

Brwftrrdde Orchestral de Paris con- 
ducted by Emmanuel Krivine, ID- 
cfael Portal, clarinet, PhiBn Bride, vi- 
ofin sokx Mozart, Haydn fffae). Salle 
Pleyel (45810S30). 

Orchestra by Clau- 

dio Sdmone. Orchestra Crinmes 
Choir conducted by Jean Sonrisse: 
Verdi's Four Sacred Pieces (Tae). La 
Triaitt church (42337288). 

Or chest ra de Paris soloists - chamber 
music by Debussy, Those, Schmitt, 
Caplet ( Tae 6.15pm). Salle Pleyel 


Elizabeth HexMn, piano: Schubert, 
Liszt, Rene Herbin, Beethoven 
(Wed). Salle Gavean (45632030). 

NETHERLANDS 

Rott erdam . Doelen. Organ recital by 
Arte Ketjzer: Bach. Franck, Keijzer, 
Wldor (Mon). (4142011). 


Barcelona, Philippe Hetreweghe con- 
ducting soloists playing original in- 
struments to music by Soter, Cer cr- 
ols and Vails at Sato del TineU. Pin- 
za dal Rey. (Wed). 

Madrid, chorus and Orchestra of 
Barcelona's Festival of Early Music 
with La Chapelle Royale's c ondu c tor 
Philippe Herrcweghc, soprano Mo- 
nique flwiwtti', contralto Fiabiii^ Sab 
banya, tenor Joan Cabero Master- 
pieces of Catalonia's baroque music 
(Tue); Teresa ZyHs-Gara (Wed). Tea* 
tro Beal, Plaza de Oriente. 

NEW YORK 

Carnegie HiJI* Mnn 1 wt^ Philhar- 

maflk. Peter Taboris conducting. 
Mozart, Brahms (Mon). New York 


Pops Orchestra. Skitch Henderson 
wm^jurt fa ig , lit Smith narrator. 
Mixed programme (Wed). (2477800). 

- JnflHard (IBM Galtery): 

Chamber Music of BusseR Currie. 
(Wed. 1230). Mto & Madiaon. 

New York PhUharaoulc (Avery Blsher 
Hull): Giuseppe Skscsseti conducting. 
New York Choral Artists directed by 
Joseph Fhnmnetfett and Brooklyn 
Boys Chorus directed by James 
McCarthy. Ma h ler (Thnr). Lincoln 
Center (8742424). 

WASHINGTON 

National Symphony (Concert Hall): 
Mstislav Ros tro po vic h conducting. 
Rossini, Albert, Tchaikovsky (Duir). 
Kennedy Center (2543778). 

CHICAGO 

CMcago Symphony (Orchestra Halit 
Sir Ge org Solti corahifitfng: AD- 

Solti slwip , 

Dvofdk, Beethoven (ThurL 
(4858111). 

TOKYO 

USSR Stele Symphony Orchestra with 
Hlroko Nakamura, piano. GUnkn, 
Tchaikovsky, Shostakovich. Tokyo 
Buoka Kaikan (Mon). (2351881). 

Kathleen Battle, joprano with Japan 
Phiflurwwmif Orchestra 
by Seiji Ozawa. Arias and songs. Hz- 
toml Hall, Showa Women’s College. 

Dw'tSra^i^^^rater LjJprig, 
conductor: Kurt Masvr. Brahma, 
Beethoven. Stmtmy Akasaka 
(Die). (5051010). 

Martin Hosnstein, crito with Bugea 
Jakob; piano. B eet ho ven, Schubert, 
Brahms. Marti nu. (Thur) . (4060868). 


Hermione Gingold. who died 
in New York on Sunday aged 
89, was the last great British 
revue artist, achieving the peak 
of her fame during the last 
War in the Gate revues and the 
Sweet and Low series that 
began at the Ambassadors. She 
was a grotesque comedienne 
with a voice described by one 
critic as “a whole two octaves 
of sneer. 1 ’ 

Her personality was bounti- 
ful. her conversational style 
waspishly inimitable; after 
lunching with the two 
Hermiones (Gingold and Bad- 
deley), James Agate declared 
he had done some of his 
wittiest listening. 

She made her stage debut in 
Pinkie and the F atres in 1908, 
Ellen Terry in the lead. Old 
Vic ambitions were soon sacri- 
ficed for the serious business of 
laughter-raising and musical 
| comedy. On Broadway in 1960 


she was “strangely hilarious” 
in an ill-advised musical adapta- 
tion of Pride and Prejudice, 
Kenneth Tynan remarking of 
her that: "No actress commands 
a more purposeful leer; and in 
nobody’s mouth do vowels more 
acidly curdle.” 

She became a cult figure in 
New York, much in demand on 
the TV chat shows. Her persona 
was demonic and lewd, but she 
had great style and charm, not 
often exploited. An exception 
was her singing of **i Remember 
It Well” with Maurice Chevalier 
in the film Gigi. A haughtier, 
more wistful regret informed 
the small role in which she was 
last seen on the London stage 
(after introducing it on Broad- 
way). lime Annfeld in Stephen 
Sondheim's A Little Night 
Music (1973). She was twice 
married — to the publisher 
Michael Joseph and the writer 
Eric Maschwitz — and twice 
divorced. 


Summer at Sadler's Wells 

From Jtine 9 for two weeks will follow the Canadians from 
Lea Grands Ballets Canadiens June 23 for three weeks, with 
will be at Sadler's Wells with p iS 8 J a ? mnes - A Mid - 

three Bala n c hine works— Agon, SSP’JSFSA Dream * 7716 Bi 0 

sq *~c Dnce «d nmr Tern. 'WMS’SSfft. Msrce 
peraments. Also in its pro- Cunningham Dance Company 
gramme will be Antony Tudor's arrives for a two-week season 
Lilac Garden, Paul Taylor’s with five British premieres— 
Aureole, and some new ballets Grange Eve, Shards. Fabrica- 
ffott the company's resident Hons, Arcade and a BBC Tele- 
choreographer, James Kudelka, vision commissioned Points in 
Lindsay Kemp and Company Space; Pictures completes ths 


{ 







20 


MANAGEMENT : Small Business 


Fiiismciar Times: Tuesday May 26 I9ST 
EDITED BY CHRISTOPHER LORENZ 


•#* ^ Vr'-'" 


WHEN WD you last have an 
argument with your partner 
along the lines that running a 
home and bringing up children 
was the best training available 
for running a business? 
Uoments of domestic frustra- 
tion are the usual trigger for 
the - women could run this 
country/company / organisation 
better than men ” polemic. 

“ Many women, ■ if they 
analysed their normal activities, 
would realise that they have 
been entrepreneurs all their 
lives," says Baroness Seear, 
long-time supporter of a greater 
role for women in business. 

"Take running a children's 
party. It Is essential to have 
clear objectives: get them 

adequately but not biliously 
fed; prevent them smashing up 
the furniture or each other; get 
them out of the house on time 
and in one niece. Success 
demands pl ann ing, co-ordinat- 
ine. monitoring, controlling." 

There is increasing evidence 
that women are backing their 
arguments with action. In both 
Britain and the US women are 
now setting up in business at 
a faster rate than men. Many 
businesses are set up by women 
who have spent years at home 
bringing up a family, but it 
tends to be those created by 
career women who ■ have 
rejected big company employ- 
ment for the Independence of 
running their own show which 
enjoy the fastest growth. 

Many have taken encourage- 
ment from the likes of such 
women as Sophie Mirman, co- 
founder of Sock Shop, the 
phenomenally successful re- 
tailer of colourful hosiery; 
Anita Hoddich, who set up 
Body Shop International, the 
natural cosmetics chain; and 
Jenifer ' Rosenberg; managing 
director of J & J Fashions, a 
privately-owned supplier to 
Marks and Spencer, and the 
most recent winner of the 
Veuve Cliquot • Businesswoman 
of the Year Award. 

Despite this rapid increase in 
the number of businesswomen 
on whom other would-be entre- 
preneurs can model themselves, 
many women still feel at a dis- 
advantage when it comes to 
setting up and running a busi- 
ness. 

For this reason, women's 
support groups have been set 
up around the country to pro- 
vide advice, training and en- 



Sophie Mirman (left) and )udi Jurak : both started up from a big business background 

Women take charge 

Charles Batchelor on the Increase in female-owned businesses 


plans a nationwide network of 
agencies to support women who 
want to be self-employed. ' 

Why are more and more 
women setting up in business 
on their own ? “ There is now 
a growing number of educated, 
career-orientated women who 
have potential but who can't 
achieve it in large companies 
because their progress is * 
blocked 

Goffee, 

tional behaviour at the London 
Business School. 

Jenifer Rosenberg started in 


the US Small Business Adminis- women who had divorced and 
tration points to similar reasons then remarried. 


for the 9 per cent annual growth 
fate of women-owned enter- 
prises in the US compared with 
the 4 per cent rate for nxen- 
owned businesses. 

It also picks out technological 
changes which have reduced the 
cost of business start-ups, the 

_ trend - for firms to contract oat 

by men,” says Rob services and. women's increased 
lecturer in arganisa- participation in the workforce 
generally. 

According to the Small Busi- 
ness Administration, the typi- 


setting up SysUh, * Leeds-based 
snppiier-af computer equipment 

and services three .and a half 
years ago. * 

Bat- even they occasionally 
have to caH on a man from 
another friendly company to 
handle customers who win not 
deal. with -a.^wnan. “In tradi- 
tional industries like heavy 
engineering ’they are ' used' to 
dealing with men,” says- Jlrrak, 
“They are surprised to find a 
woman who is not a secretary. 1 * 
’•/ Their own inhibitions.' 
Women frequently lack the 
confidence to deal with' bank 
■ manag ers .and . accountants 
: because society has traditionally 
not seen them, in this role, 
i Assertiveness -training is given 
by a number^ of the - women's 
: support groups. 

• Lack of support- ~~.£rciai4~ 

husband and family. Many hus- 
bands resent their wives becom- 
ing - independent -and— •eltbecj 
obstruct or fail to support their 

- attempt to &art nr business. - 
•“ It can be in a work- 

ing -community where the 
: husband ls only just m an a g in g 
to bold on to his own job but 

• we -have also come across 
women . who are teachers or 
academics who have had the 
the same problem,” says Kay. 
Smith, founder of .Women in 
Enterprise. 

. • The Lack of male support net- 
work. "There is a male network 
of Rotary dubs, masons and 
chamb ers of commerce which 
women, particularly those start- 
ing from a domestic base, do 
not have,” Smith notes. "But 
even a woman who has been 
successful in business can feel 
isolated. She might be the only 
woman in town running a big 
business.' 

The problems women face in 
business have been exhaustively 
documented/ What has yet to 
be studied is how they can best 
overcome them. The women’s 
support groups believe training 
and encouragement can compen- 


^ _ 

Revenue gives green light 

for venture capital 


BY CHARLES BATCHELOR 


At whatever stage they start 
up in business, women face 
most of the problems which 
men encounter and more 
besides. Their most frequent 
obstacles are: 

• Practical barriers. While a 
man setting up In business can 
employ his Wife as a secretary 
and set tier wages against tax, 
a woman whose husband is 
already working cannot do this, 
A woman who has stayed at 
home to look after the family 


the post room at Marks and American woman business will find it difficult to register: sate for many 


Spencer but had risen to control 
buying power -of '£T 0 m : .when 
she decided to break away in 
1974. 

“There comes a point when 
you realise you can only go 
so far in a company" She says. 
“ The opportunities - that are 
available for men seem to elude 
women. Rather than bang my 
head against 


„ a brick wall I 

couragement Women in Enter- decided to start my own buat- 
prise, a Yorkshire-based organi- ness. 


sation set up last September, 
has already attracted 140 mem- 
bers and is setting up a coun- 
try-wide chain of women's 
business clubs. 

The Small Business Bureau, 
the Conservative Party's lobby 
group, has begun a Women into 
Business programme of 
seminars, while the Women’s 
Enterprise Development 
Agency, launched last month, 


owner is married. This conflicts 
vrith the popular conception of 
the businesswoman who has 
•sacrificed her personal life and 
marriage to her career. 

A study published earlierthis 
year by the UK Small Business 
Research Trust found that Bri- 
tish women business owners 
were more likely to he divorced 
or separated than their male 
counterparts. But the percent- 
ages for both sexes were rela- 
tivelyjow — 5.3 .and 1.7 per cent 


as unemployed and will not be 
able to claim the,£40 week 
enterprise allowance many men 
use to start ’theft- businesses. 
• Establishing credibility. 
Women find men — and often 


the British Government has 
gone a stage further and - com- 
missioned a survey by the Scot- 
tish Enterprise Foundation, 
based at Staling University, to 
find out what makes a success- 


other women — unwilling to ' fat woman-run. business. It is 
take them seriously as .business -. due to report later this year. 


SSSSS^Sr both were 

1,500 Pp° P* e tinning j ower than the rates applying 
to people in employment— 05 
per cent for women and 3 J. per 
cent -for men. 

Running your own business is 


more . 

out 75,000 garments a week and 
has a projected 1987" turnover 
of £40m. 

Other - women find that 
another attraction of self- 
employment, if they are still 
bringing up a family, is the 
flexibility it gives them which 
paid employment lacks. 

The latest annual report of figures took"* 'no account 

. .. v 1. 4 Wli ’ ' - - 


owners. 

After many years as a 
schoolteacher, Wendy Brandon 
started making sugar-free 
chutneys and sauces from her 
home -in Brighton anckrspw 
supplies a number of leading 


“People used tp think that 
every small business faced the 
same problems." says Smith. 
"Business was regarded as being 
for men so aQ advice and train- 
ing was tailored for them. Now 
research has shown there are 


stores. "When a middle-aged - '; many different types of entre- 
lady phones you up and 


preaeur. Women' don’t want 
she makes chutney people tend'- better treatment than men but 
to think : ‘Oh - one of tbose.'j they do want to be equal." 

, , _ r So I get in early in the conC ; ^nnnd str.* 

less damaging to your marital vernation that Imply Harrods . 

health than folk wisdom would and Fortnum Rim- Mason," she 5 v/otnm't Sta^paiaa Development 

vMmi, 


have us believe, the study con- 
cluded. Its authors acknow- 
ledged, however,- that their 

of 


explains. 


Agency. Attoa i 


1 Park, Love Lana, 


Judi Jurak and two friends. 

had many years' experience iff .. Bur**,. 32 Smith Squaw. London. 
the computer -'industry before . swip 3 HR. Tat. 07-222 toso. 

m- 


THE BRITISH 
opted industry Jm 
agreement front. the f h U ex I 
Revenue on a set of dear 
gntfcMnea for finds which 
set themselves up in .United 
pm turn ships fa the UK» . 

These guidelines hdre been 
under dto emsh m forth* past 
fear y en between the 
British Venture Capital 
Association, the Department 
of Trade mtd the Revenue 
And represent a mater break- 
through. forthe hjjtart.rjr fa 
the UK. - ; » 

Uncertriuty has pe rs is te d 
for yean over h far- the 
Revenue vndd treat any 
aspects' of OMkne Hmited 
partnerships’ affrtrs. With 
massy funds now approaching 
their liquidation date; the 


urgent. 


In die past many funds had 
moved offshore, which In- 
volved the expense and incut** 
ventenee ■ of- establishing *n 
operation in the Cha nne l 
Wanda or Luxembourg, or 
have tuned themselves into 
publicly - Hated investment 
companies exposed to short- 
term performance pressures. 

the BVCA has now agreed 
a four-point set of guidelines 
with Che - Revenue. 

• Ifaritwi partnership And* 
win not be liable either to 
Income or capital gains taxes. 
Instead, both taxes will be 
levied on the Investors 
directly, thus avoiding a 
doable tax charge.--. 

• Investors fa funds have 
Hmited llaMlty as Hoag us 
they do not participate In the 

This position 


was unclear previously. 

• Fund managers who have a. 
stake— Jafawp flb tf carried 
interest— fa the capital gains 
of fbetr Investments win be 
liable 'far capital gatao father 

than Intrant tax. 

• Limited partnership funds 
may set off * management 
charges against profits. 
With management fees 
amounting typically to It 
percent* year fees could add 
up -to 30 per cent re the 
rood’s vrine over to igft 
representing * eansMwriJle 
charge on investors. 

- It is not thri wo take 
gone, from negative to posi- 
tive on any of these points 
bat we have got clarity on -a 
ma nbe r of uncertainties, 
says Too y Lorenz, c ha ir man 
of the B VGA’s tax committee. 


West Germany backs r & d 


GHUNDIG, AEG-Teleftmken 
Triumph-Adler. The roll-call of 
large West German companies 
wrong-footed, if in some cases 
only temporarily, by Far 
Eastern competitors is lengthy; 

Pressure ’oh the co un try's 
smaller firms has been no less 
intense- even if. they have not 
caught the same amount of 
public attention. 

Sm«Ti firms are particularly 

hard-pressed when it comes fa 
raising finawre and landing 
research and development work. 

More titan half the. patents 
registered with the German 
patents office are filed by indivi- 
dual inventors or fay small- fa 
medium-sized firms. Yet is is 
the CTrmTlAr firm which is 
usually unable . to fund the 
steps needed to convert re- 
seaz.il into marketable pro- 
ducts. 

The realisation that the •Help to speed up-thedevelop- 

finns sector needed special ment of new technologies. The 
attention has led to Germany's- government defines a broad 


port for the faig companies 
which are profitable anyway,” 
says Andreas , Goetdeler, an 
official in the Ministry foe 
Research and Development 
“ These programmes hove been 
attracting interest from Britain 
and elsewhere in Europe. 

The Ministries of Economic 
Affairs and Research and 
Development,' currently have a 
four-point programme furring 
DM LOZbn <£3fim) to stimulate 
r and d work in small - and 
median sized enterprises. 

• Subsidies far the payroll 
costs of employing researchers. 
More than 60 per cent 'of t and 
d spending goes on salaries' so 
tiie government subsidises be- 
tween 40 and 65 per cent of the 
salary cost of researchers. 
Total cost of thda programme 
is DM SOOm. 


technology support programme 
being refocussed in recent 
years. 

"We have Launched a number 
of programmes aimed at the 
smaller - company since the - end 


area of research such as micro- 
electronics or robotics .and sup- 
ports .companies at work in 
this field. Cost DM 140m. 


ing 


A parallel programme, cost- 
g DM 158m 


to support specific 


but this money tends to be 
■ taken up by large companies, 

• Aid to improve co-operation 
between companies, research 
organisations, and colleges and 
to speed UP the transfer of tech, 
nology. Small firms which con- 
tract out research work or 
’ which second r and d staff to 
gain further qualifications at 
academic institutes receive 
assistance. Cost DM 149m. 

' • Encouragement for Ger- 
many's infant venture capital 
sector to back high technology 
companies in tire start-up stage. 
The big banks dominate the 
■ country's venture capital indus- 
try and are particularly cautious 
in committing funds to high 
tech ventures. Cost DM 70m. 

With the German government 
how committed to scrapping 
some of its aid programmes in 
favour of a general round of tax 
cuts. DM -400m of the payroll 
subsidy scheme is likely to be 
ended soon. 

But with, the pace of innova- 
tion speeding up rather than 
slowing down support for the 
small firms sector in Germany 


of the 1970s and reduced sup- g^nnd d projects fariso in- place .* seems. set to continue. 


unities 

READERS ARE RECOMMENDED TO SEEK* APPROPRIATE PROFESSIONAL ADVICE BEFORE ENTERING INTO' COMMITMENTS 


Business Opportunities 


Cash Flow Eased 

at Reasonable Rates 

If your company has aims of money Hod up In good 
quality debtor ycu can turn them Wo immeeflato ' ' 
cash using sitter bffis of exchange or an lnvotao 
dfacountlng facility at rates of Interes t that may bo 
less than yaix bank is cumnrtty changing you. 

Alexanders Discount pic. established in 1810. one of 
the membere of the London Discount Market 
Association, have far many yean speckAsed In bade 

finance. 

Rx further Wamalton ptease write or phone: 

Alexanders Discount pk. 

66 CcmhB. tendon EC 3 V 3 PP Phone: 01 - 626 5467 




a raaror mj MiMwTieiwLSKiMiai omsoN »the 

Merazntile House Group 

PlTOnMnoNM. mutfM. umeu 


HEAOOVFTCS 

HOmSbict 

LaedeaWlYTFH 

TdcpkoH: 

01 -WS 6291 



Jackson-Stops 
& Staff 


J^tiooslAgeou 

with 

rqporu] knowledge 


MORA1RA, COSTA BLANCA, SPAIN 

twuhqff-thore 

tKocstmau{ 

Free ho ld Land zoned commemal with pennission &r:— 

Shops with residential units, xvpmrunhet, selfsermce apartotaftt, 
hotel, retirement homt, health can, tportt/stxial/heahA chtb, etc. 

Ma gnifi ce n t 12,S00m z site, 31dk>metxesfinmdtese&indenseiypapuiated 
vfilBim, together with ire already erisring purpose btxDtaalrenowMd 
T7w6 Tabaira ImentachmaF with Large swimming jyWj jwj ba r 
and - two sll-weather tennis courts. 

Price guide 1,250,000 Swiss Francs (£510,000). 

Coloured b ro c hur e and information: TAr 2537^ V»r- . 




INNOVATION 
BRINGS SUCCESS 


INNOVATION? 

In the USA and in JAPAN well experienced 
. trading firmj specialised in . 

- die acquisition of companies and groups . : , 
the sale of companies and groups 

the procurement of partnerships for ' 
diversification purposes 

establishment and formation of 
Joint-Ventures 

is able to realise any of your projects. The 
first class contacts we can provide world-wide 
as well as our experiences and activities in the 
world market make us reliable partners.- 
Please contact us. You may count on our > , 
confidence. 

Cipher K-03-990009 
Poblidtas, CH 4010 Basle 


? ENTRtPREMEUR WANTED - ’ 

r ... 

K unique opportunity requiring (fair and imagi nation exists for an 
Entrepreneur to set up and operate a new business venture within 
one of CemraT ‘London’s largest and most prestigious new develop- 
ments. The accommodation which, comprises approximately 
£000 sq ft may be ui«f for a" number of different operations Which 
bright include the following: 

£ ART 1 GALLERY ^ . . ' ! ' 

’J* BANQUETING HALL . 

EXHIBITION OR CONFERENCE CENTRE 
CRECHE 

HEALTH AND SPORTS CLUB . 

AM hom W wum atwuM rephr in wrMna Se Bex F740T • 
RnancM Tbnea. 10 Cannon St landon eCH* 4«Y 


WE MUST GO 
ON MEETING 
LIKE THIS. 

‘Let me tell you Warren if you want 
to meet where the big events take place 
all' loads lead to Birmingham. Super Prix 
motor racing, test matches, major golf tournament^ 
International Horse Showand athleb'csJhe MilkRace. 
Plus a huge choice of conference centres and an 
amazing night lifel 


DATA COMMUNICATIONS COMPANY 

With factory based In West London (Nr Heathrow), ia looking 
for an Equity Partner fa market- ta , proven range of 
sophisticated commuui cations multiplexers and networking 
equipment. Company currently- selHpfc Chip custmner 

base in UK and Europe. Principals 

Box F7391, Ffnondnl lfaire. ___ 

20 Cannon Street London EC&VBY- - 


; NEW PRODUCTS WANTED FOR NORTH AMERICAN / 
NON-REStDENTTAL CONSTRUCTION MARKET 

Tin tin taut Corporation, leading ma nufacttnvr. cHatHbwwr and jM^Dar 
at imftal framing ami JmiLllng ayazaraa, aaaka naw products to dlatributa 
ngtianwlda through tS aarvica cantras. 

Tha 100-atrong UnlatnR idu forca, backed by c om prohanalva manufaotur. 
ing faclliiiaa. aia actfva' in tha architeaturel. conatfuedon and indtMtnal 
mark an nnd oifar an ocrtstandtng opportunity to Intro d oca appropriata 
quality products to US cuatomara. 


Reply direct to;. 

•, Vicn-PraaMant — C u rop aan 


1 • - : 

■ -David 

UN (STRUT (UK) LIMITED 

Edison Road. Etna India trial Estate. Bedford HM1 0HU 


Fart growing Business Service Company b loo king for 
private investors to rabo 

aaojno expansion capital 

Tba. company, a world loader in It* field, baa existing sales of CM 
and oparatas'ln five eoantrfao 

Equity and loan finance is required to continue rapid UK aatf 
international expansion programme 
A large minority In tare at la available and suitably experienced 
management participation would ba welcomed (BE& .possible) . 

RepUn r to: The Chefrmeh, Bog F7393. Fhtenetet Timet 
TO Cannon Street, London ECdP 4 BY 


" FOOD PROCESSORS 

Established food distribution group wishes to acquire - controlling 
interest in a company engaged m forming farther processed vege- 
table/meat products, eg. fishcakes, burgers, croquettes. 

Ability to <»p« with' immediate inertase In production essential; 

Replied tot 


«2-M City Read, iooden, ECIY 20A 


TUeTve GcrrA wtittNC 



HALFORD&BKMMGHAMSUPERPRDC 


‘Put your toot down Bruno and well celebrate 
the days work on champagne. 1 

UlThe Big Heart of England. 


Please send mea copy of the Bhrintfam Conferenc e 
endTimdMmWoL. _ 

^ -, . ■ ■ n-/2S/B 

- • • - : : 


.ftateodr. 


To: BirmJAflham Convention <5- Visitor Bureau 
9 The Wharf, Bridge Street, Birmingham, ffl 215.- 


BIRMINGHAM. ONE OF THE WORLD’S G R EAT, : M E E T I hf'.G PLACES; 


Doyouhwebeatoontate 

*n ^_«a 

>p PWtfMjuipwqoni wb 
MOg oaapdH 

WC ARC LOOKMG POAYOW 

ReariMagoitnrtwa " 

Sore rMOdteroy product nwdb 
M ui um sj ng'nwfr . our product n q — 


alapprax. 30 % 

. and moMal logo 
toprowliae idrt e n a. 


. andwtatK 

. Cts w r tH tmOmbH- 
■arfnarPMztg . 
D-40BO»IOa H a sj ted b |cfil 
'MBC8B2B19I 


.■.-■.OIL - '- 

A Houston-based organisation with International 
connections fa expanding ite client base. Onr 
expertise indades marketing - petraienm and 
petroietun by-jn-odttefa 

We are presently seeking prospective clients In 
are end-users, principal buyers 

jya? - Write invonlOench to: '• 

.. PETRO 77 SYSTEMS 

P.O. Box 31574 
Houston, Texas 77231 


NON . EXECUTIVE DIRECTOR 

• (taiow)- 

^^^«S. COmp *w' ,y fnnt « n tr tor ongoing projaot* 

Plemte npfr to Box F7dOB. Finenclat Thnet 
" ' . ».Cahoqn Street. London EC4P 4BY 


... * S T**H SHeD CONSTRUCTION PLANT 
4 A I K AMI SEBVICC COMPANY IN SCOTtAun 
SEEKS ADDITIONAL DEALERSHIP WITH ° 

. -ESTABLISHED POPULATION - 
We have experienced plant fitters, flrtt dan part* 

^r P ^Tb^ n ^^ h ? S 

Industries throughout the country. . * lnd 

Photo reply In confidence to: ■ .. 

F738S, Financial Times 
70 Connon Street. London EC4P 4BY ■ 


iM.te.M H. , JOINT VENTURE —FRANCHISING 

Alre^^MteUlishacM^ ^000*1^11? out^^ a nd*awanrfta 

tor additional prod«5^J^aE^i„^^ f, ^ ,,r •witina™ 
oMar pubateirtlal .aquiiy to bn Wdivliiu>r» > 2 !^ < enablaa 

SSwir rwCf abilhy ' capital of nom^S,*^ 11 . "J* 

. public flotation » soon as poaalbla. “ wf * w •« 

PUM. 34 IVOII PLACE. LONDON NWl sea 


s».S^2 r rtsources ! Btr«tehefl-» 


Write with deiaHy 


r*™** «** To ecp 


4BY 


FOR SALE 

®.^^hcraft king air^c 

With or witho^p^ting^Lslitanco 
^Enquiries; 

AVIATION ■ 

0509 213232 


EXECUTIVE JETS 


ow »»» d/roct dn: 










Businesses Wanted 


Hotels and Licensed 
Premises 


Businesses For Sale 


“JOIN THE GLENTREE PIX BANDWAGON” 

CNmIih Fte am km " to Dnk wmt ** «U compenle* In the fotiowtng Industrie*: idio egancy. raeidetrtfel/ 
rnmnwchl pr o party, financial service* to Include. In* an noa/mortg eg ■ braking pro parry, proparty develop- 
■nant/lnveement and mtier related Industries. 

It yog in iwtn of a nrinbn company with rain net pre-tex profitability of £500.000 and erroeterrOelfy 
upwards, 3 yaar tndtng -record and manageimat to raraain wfth tha company, than p i — na cpanot ua. am 
will pay oaquIoMon ton K necessary. 

Mok Uefeateto. OtMHree Pie. Ml RncMay Hoad, London, HWTf - Tolt (privets llna) ffMN TOt 


HOTEL REQUIRED 

MAYFAin/KNtOKT^ntRME/ 

KENSINGTON 

op to 1BQ room*. Pratarabty 0 atm 
Required for international 

organisation 

Principals only ptasxe contact: 
KESTREL LTD 

Tat: MM 7T1HM - TM*e «U1 *14 


DO YOU WANT TO EXPAND? 

A mccwsfol businessman, 'with many yean experience in 
building private and public' companies, bu substantial funds 
to Invest In small to irofllnm sized companies, which base 
capable management and a. market to exploit. 

Assistance wQl be given not only with funds but also with 
management techniques- to further the development of your 
company, both by internal growth and acq u i si t i on . 

If you are interested pleas* reply in the strictest c o n fide n ce, 
providing of ■ your company's financial record over 

the last three years, along with a brief descr iption of 
your operations and products and management structure. 

Alao a brief outline of .where, you would Web to take your 
within the. .next three yean would be : -helpful. 

Apply to The Chairman, 

. Box NeTZ3067, Financial Times 
10 Camion Street. London EC<P. 4BY 


RECRUTTMENT/ADVERTISING 
AGENCY /CONSULTANCY 
BUSINESS WANTED 

Fast expanding diversified £5m+ t/o co ns u W ng group seeks 
farther acquisitions In xecndtineot/selectlon/seaRh or adv. 
agency btuliiocuKft. -Funding available if nee. Outright purchase 
er major interwt Write in confidence to: 

Box H202S. Financial Times 
JO Cannon Street, London EC4P4BT 


WANTED TO ACQUIRE 

SMALL BROKERAGE FIRM 
OR LICENSED LONDON STOCK 
. EXCHANGE MEMBERS 

Our client wishes to acquire a Shell Company or smal l 
operating firm with the requisite licences as Lond on Stock 
Exchange members or aa licensed dealers under the FIMBRA 
rules, in the U.K. 

Please rqpfcf immediatclv f» strictest wnfldewxtK 
Box F73S2, Financial Times, 10 Camum St, London EC4P 4BY 




WANTED 

mm 1AML AND/OR COLOUR PRINTING COMFANY 



air freight company required 


Wo are an established snrfeoe forwsntor/NVOCC operator rauldeto 
bUco raprosantatlon. In Hna with our Juan* for expeneton wi Uriah to 
Include Air Freight services w our ban of operations. 


Include Ah' Freight services to our ban of opsrstions. 

W* mm. looking to moquln outright or hM majority shs rahj 
And established. Air Freight butJnan bxsedin tho youth cl 
expected that' mating- managarasnt and staff would bo na 
Principal* only plaoxa write «©: 

Managing Director 

Cube SUpplng and Warehousing Co Ltd 
Cwurd BuBdtega, Uvatpool U IDS 


bi sethre 
nd. 'It to 



FLC REQUBED 

' J 1 

'«* 1 , ^sr yMtv ^‘ 

AH replies wW be trastsd In at rlct co nfldaoco 
Hnn write ie A w HXSS 

financial Time*. tO Cannon Stray c, London 6C4F 4Sf 


Business Opportunities 


INVESTMENT OPPORTWHTY 
CHESHIRE 

A Qiope— d new Q« gj y 

.ixi^mi mf Chester Invites Mwnwn 
50 k minimum 




(IN RECEIVERSHIP) 

The Joint Administratis Receiver offer for sate the 
taisinessandassetsofFtobertAdklnsonLhTia^ 
The company is involved hi the production of 
International co-ecfittons of UusbatedbooksL 
Principal features of tee business inefude:- 

* Ck>pyrighteandreverskm to approximately 
48 titles 

* Contrek±svi^maiorpubfishersinUK 1 U^, 

. Netiwlands, Sweden. France, Italy, and Japan 

* Unaud^ turnover for9monthsto 
31.a86 -£530,000. 

Forfertherinfbrmalton please contact- 
David Buchler or Patrick Wadsted 
; .Arthur Andersen ACo^RO. Box 55 
1 Surrey Street 
London WC2R2NT 
Telephone: 01-4383)71 
Telex; 8812711 
Fax:01-8311133 


\TI u :k 
P fiKSt-A 



THE BUSINESS EXCHANGE 

SWEENEY TODD CORPORATION 
has been acquired for approx. £2.9m 
by MECCA LEISURE GROUP PLC 

The transaction was initiated and coordinated by 
THE BUSINESS EXCHANGE 
in conjunction with 
DELOITTE HASKINS & SELLS 
and 

GRANT THORNTON 

(both founder members ofTbe Business Exchange) 

The Business Exchange, a market for buying 
and Selling’ Companies, is operated by The 
Business Expansion and Exchange Group 
Limited, a Licensed Dealer in Securities and a 
member of FIMBRA 

Membership of The Exchange is limited to the 
more progressive firms of Chartered 
Accountants, Solicitors and Actuari e s. 


Haskta+Sds Giaml 3S222 


Telephone 


TOUR OPERATOR 

Small specialist tour operator and 
■•tall 1 rival agency unrated in 

South Eoat for sale 
Profile c £40.000 
Owner retiring 

Principal* only pHate rapty to: 
EASTCASTLE MANAGEMENT 
GROUP 

Liberty House. 722 Regent Street 
London W1R 50E 


DESIGN & CONSTRUCTION 
RECRUITMENT AGENCY 

LONDON/SURREY 
Well established 
Good current list 
Staff remaining 
Circa £300.000 

Write Box H30ES. Financial Timex 
10 Cannon Sr. London EC4P 48V 


FOR SALE 

SUBSTANTIAL MANUFACTURING 
JEWELLERY COMFANY 
Specialising In m»is- produced 
9ct gold Jawollery, supplying all 
loading multiples and mail order 
Replies will be treated with 
utmost confidence 
Principals only 

Write Box H2060. Financial Timex 
10 Cannon Si. London EC4P 4BY 


BUSINESS FOR SALE 

PROFITABLE COACH AND 
BU5 COMPANY 
in South East 
Turnover £750,000 
Freehold available 

Write Box H20S7, Financial Tim** 
TO Cannon St. London ECSF 4 BY 


COT5WOLDS 

Expanding busy market town 
Well known long established 
CHARTER BOOKSELLERS 
£50,000 plus SAV 
12 year lease. Owner retiring 
Write Box MOSS. Financial Timas 
SO Cannon St. London £C4P 4BV 



WEST COUNTRY 
FREEHOLD FILLING STATION 
GARAGE AND RESTAURANT 
COMPLEX 

Situated on A3C3 

Currant throughput 880.000 gallons 
PRICE £285.000 
Dataili obtained: 
HUMBERTS YEOVIL OFFICE 
TEL: 0038 77277 





IMOWTIYE PROPERTY F UMDIMB 

rai ww.rao.Ba Bttgaa.'a 

Western Industrial Firiaucc Company Limweti 


MORTGAGES 

w oa MW Hf dat reildaw t UI 
end indastrtal pi wpwrtle i 
■C prime rata* B/lfi yewa 
INTEREST ONLY 
Mtatama Uh CURfifM 



INVESTMENT 

OPPORTUNITY 


REQLNMB CAPITAL IMWW* 
TO ACMM MOWH P 0 nf*«nAL 

Extedng merirete "iwiSSOSS? 110 * 
Pi iw e n porforweffee so date- . 

tnV* test* 

CAM CvoeuCNw. Sam Fim 
ensnolal-tM 

M Carman St. LMdon *DdP«T 


BUSINESS BUYERS 
IRTERMTIOMU. 

• *^S2SSL 

• Structure • SmpMaso 
e Assist la • Ooao 

WO tuwa ebtetesd fteaegta far 

■ 0 % of oar cUenre eeg etow— 

,om cr^5? pw 

Teh (201) 200-1711 
Telen 22S749 BOI USA 



Road Surfacing 
Contractor 

for sals as a going concem, the bade and fewness asseb of 

Rugby Tarmacadam 
Company Limited 

Road surfacing cortractora opeQ&ngfmmRugtge 
WamrickshliB 

PrrifRable trad^g recod Good curert order book. Latest 
annual turnover SBQftQOQL 

Freehold premises available together wSte plant and eqtdpmart: 
20emphyees. 

MMiEm 

Uteri Rs«A m HMMf StoNL 



m 


Price Tfhterhouse 


Beacon Publications 
PIC 

0N RECEIVERSHIP) 

The business and assais of the above company aa for safe 
following Hie appointment of R. J. Rees FQA and 

• Pubfehw of business aivl letsum Inftmalion hatdboofe 

dkUaJi liTan iJmlim 

ana raectonesL 

• SpecfafistotoMkkDBEastartdJFbrBastpubBsKtoginaftalSL 

• lumowr approximately £ 2 m paworidwida 

• 6250 sq ft. FtedKjU premises in entetprisezoneL 

fgi<i1ntKltoSNrfF-i,rilraWetoteete» t «eM>iMiie— . 


KITCHEN, BATHROOM 
AND FUJMBING SUPPLIES 

STOCKPORT 



warehouse and offices. 

• Trade and retail customer base; 
established for over 23 yeaxs 


O atydjd nmhlfig Bfnrfa. 

• EquipmentimdTdikiffl. 

Buticoto available on request 6nm: 

Gr aham M c lnoes OT Mkh a ri ’W hinthe ad, 
SoiceraDd Bader & Partners, 12 Booth 
Street, Manchester M60 2ED. Tdrahone: 
0612369721 Telex: 666710 ESANO G 
Fax: 061 228 2681 

Spicer and P^ler 

&HartnefS 


CITY WINE BAR AND RESTAURANT 

Establiihed City Wine Bar and Restaurant situated in prime 
location. EC4. for cash sale. Turnover film. Principals only. 
For further information contact: 

Box H2071, Financial Times 
10 Carman Street, London ECiP 4BY 


SPORTS SHOE AND GOODS DISTRIBUTOR 

FOR SALE 

Well known own brand. Turnover £L5 million. Northampton 
baaed uinut relocate due to end of lease. 

Please write to Box R2062, Financial Times 
JO Camum Street, London EC4P 4BT 


RlMte eto M LM i. Hlfrt W.mHL 

TdmteKlinPIMIWtelWMlteteMinteT. 

Price Waterhouse fp 


FOR SALE 

Water Park — Algarve 

An g mm al and cxtxBent opportunity to acquire die largest 
theme water park on die Algarve which Jbas recently undergone 
mbatentialinqwcweinents to bring it op to USA standards. 

The sale can be effected prior to the start of dustra&tg season, 

with ccBtt u m i ngnianageinegtCTanmitmenttf required. 


Sn 




COHMPP«TM»AHP 
CHEMICALS mfiM MTS 
Per late 

SofttUBm trttlk tM 

Mk* US52W nrecric tern 
CliamhaHa 0*> requeea 
DEAL YOU WW7 fOOQCt 


PROBLEM SOLVERS 
_ Company ehalnmn. aoglnjar 
and accountant available for 
o-nort unity /tfoubtoihooonf 
anignmano for conpuiw and 
h wastm a n t funds 

Crib PCS Ltd 

M4H M74 - tiKXOM 
- Or wHtns f LOfflfwrd Stmt 
Abingdon WCI4 SSp 


DIY BUSINESS FOR SA1E 
OR INVESTMENT 

The business and assets of a company (in adminte- 
tratdon -which has developed and patented a multiple 
appUcation worktable and workbe nch for the WIT 
market are ottered for sale or, investment. 

For further details write to Box 32075 
" — Financial Times , 10 Garmon Street 

London ECdP- 4BY 


FOR SALE 

Bhw chip monthly titles for sale. T/O £12 mlllhw. 
Pretax net profits exceed £130,000. Only principals, 
not agents, need apply. Cash sale only, no shares 
etc. Service Contract available. 

Write Box H204S, Financial Times 
20 Cannon Street, London EC4P4BY 


RETAIL BUSINESS IN 
SPORTS AND LEISURE 
NORTH OF ENGLAND 

Tqg> •§!• as n g n*" g concern. Highly pro fit a b ly, turnover in 
ef {us mlllica For farther details {principals only) 
reply to: 

BOX H 2073 , Financial Times 
. 30 Cannon Street. London EC4P 43Y 


LEICESTER AREA 

Ftosncislly sound highly efficient light precision engineering 
business. Prime freehold premises, 0,000 sq. ft floor ores, 
i acre site with expansion potentlaL 

Fully equipped with modern machinery. Turnover £500,000 
P-a. For sale as going concern with continuing management 
Applications from principals only. 

Box BS033, Financial Times 
JO Camum Street, London EC4P 4B7 


FOR SALE 

STEEL CASTING FOUNDRY 

and trained workforce 

T/e £2 million plus with substantial asset base 
Located In West Midlands 

Principal* only reply to Box H20BI 
Financial Timex, 10 Cannon smut, London CC4P 4BY 


LADIES FASHION SHOPS 

Ou t sta ndin g opportunity to purchase a well run business 
operating from prime leasehold sites. Profits circa £4504100, 
price circa £4,000,000. Principals only reply to: 

Box H2053, Financial Times 
JO Cannon Street, London EC4P 4BY 


MONTHLY MAGAZINE IN MARBELLA 

Spanish re g is te red company publishing a profitable magazine in 
English is offered for sale. Circulation to affluent visitors and 
r es i de nts along the Costa del Sol and in Gibraltar 
Asking price: c£25&000 
Write Bom W206I, Financial Tima* 

10 Caiman Street, London EC 4 F 4 BY 


LONG ESTASUSHED HEATING AND VENTILATING COMPANY 
Situated In Northern Home Counties 
Good order book and long term service contracts 
Annual turnover approximately £I5m 
Price indicator: OKLOOO 
Principal* only write to Bo* H3BS9 
Financial Time*. f0 C annon Street. London EC4P 4SY 


FOR SALE 

MIDLAND PARCELS 
DISTRIBUTION 


Turnover £lm plus 

Principals only write to: 

Bo x M2055. Financial Timex 
10 Cannon St. London EC4P 4BY 






















22 


mnnnrfel Times. Tuesday May 26 10ST 


/< 


FINANCIA L TIMES 


BRACKEN HOUSE, CANNON ISTREEC LONDON EC4P4BY 
Telegrams: Bnantimo, London PS4. Telex: 8954871 
Teteohone: 01-2488000 


Tuesday May 26 1987 


Insufficient 

I 

homework 


East-West 
arms control 
talks have. 


says David 
Marsh in Bonn, 
rekindled on 
both sides of 
the Berlin Wall 
a long-cherished 


.THE OVERALL performance of 
'Britain's schools is so dis- 
appointing that it is proper 
that the reform of education 
should have become a major 
'election issue. Neither the 
Labour- Party nor the Con- 
servatives can be proud of the 
'generally, low standards of 
achievement of the past two 
decades. This has little to do 
with whether schools are com* 
prehenslve or not. 

The proportion of state 
school-leavers with five or more 
higher grade passes at O-level 
or CSE rose from 21.1 per cent 
in 1966 to 26.9 per cent in 19S5 
— a period during which the 
number of children in compre- 
hensives reached 85 per cent 
of all state secondary school 
pupils. However. Britain's 
public examinations do not test 
absolute, unchanging standards, 
but rather sort candidates Into 
the best and worst of a par- 
ticular year. The actual stan- 
dards remain low; the evidence 
is to be found In the growing 
pile of reports of studies of 
comparative attainment in 
Britain, - the rest of Western 
Europe and Japan, narticularly 
in mathematics and the sciences. 


Again, the Conservatives pro- 
pose that all secondary schools 
control their own budgets. The 
Alliance takes credit in its 
manifesto for pioneering this in 
Cambridgeshire and would 
extend it nationally — but the 
Tories would allow the newly* 
autonomous schools to opt out 
of local authority control, while 
whole London boroughs could 
march out of the Inner London 
Education Authority. Labour 
looks largely to bigger budgets. 

It is not clear whether the 
Tory proposal to allow schools 
to run their own affairs stems 
from a general distaste for local 
government or, rather, a 
genuine conviction that some 
element of consumer choice in 
the form of “ parent power ” is 
the best way to improve 
quality. 


Vision of 

reunification 


Consumer choice 


Core curriculum 


Judged by the manifestoes, 
the Conservatives have moved 
further than the other parties 
towards recognising the nature 
of the -problem. All three now 
accept the idea of a core 
curriculum, but the Tories’ ver- 
sion is the most specific: it 
would emphasise mathematics, 
English and science; and pro- 
gress would he assessed against 
levels of attainment in pub- 
lished syllabuses, at the ages 
of seven, 11 and 14. The other 
two parties talk in a more 
woolly way about a " flexible ” 
(Labour) or “ broad and 
balanced” (Alliance) curricu- 
lum, with individual perform- 
ance recorded in V profiles " of 
, . achievement. 

What is not spelt out is the 
degree to which they would con- 
sider it necessary or possible 
to override the resistance of 
the old order, in the form of 
local education authorities and 
Ujttp : . increasingly militant 
teachers’ unions. 

- Jt is. in .these- areas that tiie 
—-Conservatives - show the most- 
determination. They may not 
have handled the recent stages 
of the dispute with the teachers 
particularly skillfully, but they 
have not shrunk from a 
necessity to impose - a settle- 
ment after two years of disrup- 
tion during which the main 
teachers’ unions could not 
agree among themselves. 


It is desirable that good 
education be regarded as an 
important goal by all elements 
of each community — local 
businessmen included. Properly 
constituted local authorities 
could encourage widespread in- 
volvement in the success of 
local schools. The Conserva- 
tives are not, however, putting 
forward proposals to reform or 
strengthen local government 
Thus the full weight of their 
policy falls on a combination of 
direction from Whitehall plus 
consumer choice. When Sir 
Keith Joseph was Education 
Secretary he wanted to intro- 
duce vouchers allocated to 
every parent, for spending on 
education. That proposal fell 
by the wayside; now the Con- 
servatives suggest that schools’ 
budgets be set by the number 
of pupils the school attracts. 
This has the merit of putting a 
premium on popular (?good) 
education, but it has the elec- 
toral disadvantage of raising 
more questions than the Con- 
servatives have yet managed to 
answer. 

Many of these questions may 
not he relevant to the debate 
about the quality of education. 
“ Back to the 11-plus ” and 
“ bade to grammar schools ” are 
election-time headlines, not 
serious contributions. But the. 
Conservatives, who must take 
the credit for a . courageous, 
strategy' for- education, 
only themselves to blame if 
they are now seen to be flound- 
ering on the details. Mrs 
Thatcher, of all people, should 
have known that it is necessary, 
to do one’s homework. No 
wonder the Tory campaign has 
got off to such a poor start on 
what may be their strangest 
issue. 


The case for 
Paul Volcker 


T HE “German question” is 
once again troubling the 

German soul — anrt 
threatening to send a tremor 
across the political map of 
Europe. 

Four decades after the coun- 
try’s post-war cleavage, the 
tangle of contradictory emotions 
— hope, fear, suspicion and 
intrigue — which both and 
separates East and West Ger- 
many is again coming to the 
fore in the Federal Republic. 

West Germany has become all 
too used to the trauma of being 
Western Europe's front-line 
state. But the present thaw in 
East-West relations, centred on 
the prospects of an accord be- 
tween the Soviet Union and the 
US on removing medium-range 
nuclear missiles from Europe, 
is paradoxically exposing the 
Federal Republic to a new and 
crueller dilemma about its place 
in the world. 

• The painful wrangling in the 
centre-right coalition of Chan- 
cellor Helmut Kohl over Mr 
Mikhail Gorbachev's proposals 
for a “double-zero” option on 
medium-range missiles is just 
the latest and most potent ex- 
ample. 

The Federal Republic has been 
suspended since the 1950s in a 
force field between its obliga- 
tions towards the European 
Community (especially France) 
and Nato, and towards the 
eastern half of a divided coun- 
try still regarded officially as a 
single German nation. 

For a long time, with the East- 
West divide firmly entrenched, 
the westwards pull was am- 
biguous. 

. Now, as the superpower 
relationship shifts in response 
to the reforms -and disarma- 
ment overtures of Mr 
Gorbachev, West Germany is 
t hinking with renewed inten- 
sity about the state’s long- 
shelved commitment in its 1049 
constitutional (by definition, 
provisional) to seek reunifica- 
tion of tiie German nation. 

' And the Federal Republic is ■ 
asking itself whether it can 
inanagfe to forge ‘a new. rela-' 
tionship with Eastern Europe 
without at the same time 
diluting its security ties with 
the Us and the rest of Nato. 

The question increasingly-, 
preoccupying chancelleries in - 
both East and West is. not so - 
much the almost traditional one 
— raised in its latest form four . 
or .five years ago during the • 
resurgence of West Germany’s . 
peace movement— of ' whether 
the country is drifting slowly 
into neutralism. The central 
issue is more subtle. It is that 
Bonn, made more self-assertive 
by the country’s economic 
strength and by the coming to 
power of politicians (like Mr 



■THE TWO GERMANYS 


A half 




Kohl) not involved in the war, - Social Democratic Party (SPD) 


is looking more clearly than In 
the past at safeguarding its 
strategic interests. 

It is finding that, to some 
extent, they overlap with those 
of its eastern neighbours. Ahd 
they are not necessarily always 
the same as those pursued by 
tixe rest of the Western alliance! 

There is a shift away from 
the idealistic goal of European 
federalism, forged during the 
Adenauer years, and from the 
view of former Chancellor 
Helmut Schmidt that Bonn 
could play a stronger economic 
and strategic role on the world 
stage. 

A note of going it alone — ■ 
not aggressive, but curiously 
passive and introspective — 
has crept into Bonn’s inter- 


range nuclear missiles and con- - rumours of Moscow’s support 
ventlonal forces. - for the idea of eventual . re- 

But tiie ‘mutual- ' ir r i t ation ■ unification — as a diplomatic 
within Nato raised by tixe West card to capitalise on' West 
German stance, may leave last- ' Germany's wish for closer ties 
ing traces. Mr Han&Dietxlch with the East and to unsettle 
Genscher, the Foreign Minister, the- Western allies, especially 
warned at the end of last week France, 

of impending “ self-isolation” As always, the uncertainties 
of the Federal Republic with- in the East-West power flame 

in the Western alliance. Much converge on Berlin. The former 

allies — last year by “neflotiat- will, depend on how the. West capital- of Bismarck's and 
ing** a nuclear-free zone with Germans choose to continue Hitler’s empire is now cele- 
East Germany's Communist the se pa r a te but interlocklhg' bfatlng its 750th anniversary 
leadership which, if ft were debate oh the question of links' with separate festivities 1 in its 
ever to come into force, would with East Germany. eastern and western halves, 

damage West. . Germany’s Whether or . not politicians . Gorbachev, during hts 

security links with-fbe rest of decide to * pursue the * issue of visit to East Berlin later tins 
Nato. reunification, there is -no doubt . week for a Warsaw Part sum- 

Mr Bregger is the that it still has " considerable but. is expected to refine further 

spokesman for many on the emotional appeal for West -ti* e _ Rouble 


Chancellor, who - pioneered 
West Germany’s normalisation 
of relations with its eastern 
neighbours- . during the 1970s, 
talks of moving towards re-' 
unification more in terms of a 
German confederation. 

. The SPD. also attracted the 
ire of the conservatives— and 
of some of West Germany’s 


^ee?«w^rlS J^tioT^v^S jSata the Bo^ Comment 

or re^irtSing the EC. 500 to 5,500 kflometres-wottld principle, but that only a. small 
omy or resirucinnu* concentrate on - Germany a minority, many fewer, than in ^bohe series of vasits by-the 

unique threat of both conven- the -1950s. - believes in its jjg &<£ ^OTteJ 

■ .Berlin’s security underlines the 


right who believe ttot tee GermanT Opinion p5os show flivihg Wm afurther ebance to 
"double-zero 7 proposals— to that a large majority at .the- on 


Mr Otto Lambsdorf, former 
Economics Minister, now. econ- 
omics spokesman for ' the 
liberal Free Democratic Party 
and one who has fuelled- the 
reunification debate, says: “We 
have developed to be a very 
average .country * . . We have 
come to a very provincial level, 
and that is what many of our 
friends should like us to be. 
We have dull government; we 
do not have .’ an exciting 
Chancellor — but it gets results. 

According . to a senior 
Foreign Ministry official: “Dur- 
ing the 1950s, the 1960s and 


The EC has gone on the path of .Seen a 7o 

■7 . % •. • . r ,j ‘ West Berlin today, a fortnight 

enlargement. It IS no coincidence after President Mitterrand. 


that we are looting to the East* 


with President Reagan due on 
..June .32. 

But this don; not. lessen the 
Jong-term uncertainty about .the ; 
iMrihiiHr - • "£te «f the Wert’s. btttion. on 

feasibility. “ .’.IjJ* ;7 £ast German territory. - : 

Any move by tixe Federal a bid led by Mr Eb&ftard 

the - conservative 
mayor of '. West 


tional and nuclear conflict. 

The Federal Republic. East 

Germany and Czechoslovakia Republic along this road _ is Diepgen, 

would be -thq -only areas with! barred by the Bonn Govern- governing 

, in range of -tixe shorterrange menfs condition— echoing the Berlin, with the support of" Mr 

the 1970s, we" could believe in battlefield nuclear missil es re-' line laid down by Adenauer — Kohl, to try to inject new move- 
a united Europe. Now the EC malniixg after a medium-range - that the only basis for- reunifies- ment into West Berlin’s xe- 
has gone on the path . of accorch-amountmg to a tlon would he free elections in lationsbip with the East by ex- 
enlargement It Is not ixo- “ singling out * of the Germans, the whole' of “Germany. As if- changing higMevel - visits* has 
incidence that we are looking to use a phrase now in vogue taken ab ack by the vigor of the broken down «n«H much acri- 
nxbre. to; tixe-Jlajry ’/ rf"*' :i 2a- Bohn: -~ * *TK1 

A critical view ofthe EC The US, Britain and France, helped foster, Mr Kohl, in Paris relief of the four victorious 
for no longer paying attention to varying degrees, have made on Friday went out of his way war-time powers, which 
to the goal of German unity clear that they - bade the to dampen reunification sp ecu- formally rule the city and 
comes from Mr Alfred Dregger, “ double-zero ” option; and lotion and said -the Federal , which are reluctant to see any 
chatariaj*' of the CDU/CSU. West German voters in two RepubHe would., not rMl he- change in the city's delicate 
c*nnsPTvatw« nnrMamentarv state elections earlier this tween the stools 7 of East and 


conservative parliamentary state elections earlier this tween the stools _ of East ana status, 
grouping .and an advocate of month delivered a rebuff to West - As -part of the- 750th anniver- 

a policy link between the dls- Mr Kohl's Christian Demo- Additionally, the objective is sary celebrations, Mr Diepgen 
armament proposals and tixe cratic Union (CDU) for waver- fundamentally countered by the originally made dear his will- 
ing over the deaL - - - ~ East G erman leadership ^ whlSTC^ bigness to accept' *n m Invitation 

So Hr Kohl, due to: make a has set as an equal and opposite to attend tixe official anniversary 
statement on -June 4. is 'likely goal the., carving out of, an ceremony in East- Berlin in 

to have little choice but to fall independent state firmly October. Mr Erich Honecker, 

ing, but it Is not enough,” he into line. His only hope of in- anchored withln the Communist the East German leader, was 
says. ' fi ner ring matters will be to in- alliance. also invited to come to April's 

But tixe g»*frig eastwards by cist on the need for further Reunification . is in ^theory. West Berlin ceremony in what 
no means comes only from the talks to reduce -the Soviet Inimical to the Soviet; Unton.;- would have been tixe first visit; 
right. Mr Willy Brandt, former Union's superiority in shelter- But that-, has , nbt.^ stopped to the western half Of the city .. 


reunification aim. 

“ We are dreaming now of 
monetary union, of tixe internal 
market. That is all very mov- 


Wihile a breakthrough on the 
legal or diplomatic paths is 
blocked, Bonn is trying to 
collaborate increasingly, wiflh 
the East- 1 — not only through 
already- strong trade and 
financial links but also by 
stepping up co-operation in 
areas like the environment, 
electricity supplies and trans- 
port,. 

• Nonetheless, the motives are 
contra dietary: Bonta waitts to 
stress “ togetherness," East 
Berlin, independence — contra- 
dictions which will continue to 
dog tixe German chimera for a 
good many years, to come. 


ANY MAN who raises the 
hackles of former White House 
chief of staff Donald Regan, is 
under constant attack from Re- 
publican supply-sider Jack 
Kemp and remains willing to 
do the world's top central bank- 
ing job for less than 5100,000 
a year, commands a fair mea- 
sure of respect. 

The real question, as Presi- 
dent Reagan begins to ponder 
whether to give Federal Re- 
serve chairman Mr Paul Volcker 
a third term at the head of the 
US central bank, is whether 
the markets are right in as- 
suming that he is so good as 
to be indispensable. 

The markets are, after all, 
as prone to overshoot on cen- 
tral banking reputations as on 
currencies. The imperturbable 
Dr Arthur Burns, for example, 
with his comforting pipe and 
bedside manner with Congres- 
sional committees, enjoyed 
starry-eyed respect on Wall 

Street for longer than his trade 

record probably justified. Mr 
-Volcker, with his perennial 
cigar and commanding pres- 
ence, is built of sterner stuff. 

- But even if it were true, as 
his supporters claim, that he 
alone provided an anchor for 
the world economy in a period 
of severe upheavals and trade 
imbalances, it would not neces- 
sarily follow that a third term 
was desirable, assuming he 
wants it. 


But economic historians may 
well conclude, with .the benefit 
of hindsight that the agony 
was needlessly protracted. 

To his great credit Mr 
Volcker recognised the need for 
an abrupt change of stance 
when Mexdco found it was un- 
able to meet its obligations* in 
August 1982. And by any 
historical standard the Fed’s 
role in the management of tixe 
resulting fi n a n ci al crisis was 
impressive. A leas surefooted 
response might well have pre- 
cipitated chaos through the 
world banking system. 


Change of 


‘ Mr Volcker’s central achieve- 
ment, since to took office at the 
dog end of President Carter’s 
Administration, has been to cut 
inflation down to size both in 
the US and in the global eco- 
nomy. The means, outlined in 
his radical monetary package 
of October 3979, involved the 
adoption of money supply tar- 
gets; • interest rates were left 
to- find -their -own leveL - 


Monetary policy 


The outcome was a threefold 
increase in dollar interest rates 
that administered a powerful 
deflationary shock to the world 
economy and imposed swinge- 
ing additional debt servicing 
costs on Third World countries. 
No doubt the task of expunging 
inflation from the world eco- 
nomy in the aftermath of the 
second oil price shock could 
not have been achieved with- 
out some considerable pain. 


Banking experience 

Mr Volcker still has his 
critics, as any bead of the 
Federal Reserve Board is bound 
to expect. Some accuse him 
of a morbid fear of inflation 
which is wholly inappropriate 
when the US economy .faces 
the threat of slower growth as 
the budget and trade deficits 
are brought under control. 
Others attack his determined 
opposition to an outright dash 
for financial liberalisation. But 
in a period of extreme economic 
and financial uncertainty there 
is much to be said for the 
conservative values of a tried 
and tested central banker. If 
it comes to a dollar free-fall, 
with the markets despairing of 
the Reagan Administration's 
readiness to curb the budget 
deficit Mr Volcker will almost 
certainly be the right man in 
the right place at the right time. 

The clinching argument in 
favour of having Mr Volcker 
stay for a third term, however, 
is that tixe combined central 
banking experience of the other 
members of the Federal Reserve 
Board is extremely limited; and 
few of the outside candidates 
for the job have the political 
clout, the market credibility 
and the . knowledge of pru- 
dential banking, controls that 
are badly needed in an excep- 
tionally difficult period for US 
monetary policy and tixe inter- 
national banking system. It is 
not entirely a backhanded com- 
pliment to say that Mr Volcker 
is a giant among pygmies. Even 
Ids critics should acknowledge 
that when times are tough, 
there is a powerful case for 
the devil you know. Mr Volcker 
is a survivor who surely 
deserves the job. 


scene 

And now for something com- 
pletely different. 

Bemused with slogans, and 
pole-axed with polls, this 
column turns its attention to 
the scene of another, confused 
election! 

Elections do not come much 
dearer than they -do in Italy. 
The financial newspaper H Sole 
24 Ore yesterday produced an 
estimate of the costs of the 
June 14 election of L18,000bn 
(£9bn) which breaks down as 
follows: 

L17,000ba on vote-winning 
expenditure legislation rushed 
through the parliament before 
its dissolution, L306m on 
administering the polls, LSOm 
for damage to buildings, L95m 
on protecting voting centres 
with 57,000 troops. L229m on 
blocking roads, L320m for can- 
didates' expenses, L20m for 
discount ran tickets, L60m for 
parties’ publicity expenses, 
LlOm to cover civil servants’ 
absences in support of their 
parties, and LlOm for legal 
challenges to the results. 

The figures are on the whole 
more interesting than the cam- 
paign. in which the hi 
splash so far has been ma 
the Pope. 

Italians are' not a greatly 
moralising people, despite their 
Catholic tradition. Homilies 
from the church, of course, are 
always expected although they 
are rarely as controversial as 
the Pope’s recent endorsement 
of the exhortations by his Italian 
bishops for a - strong catholic 
turnout in the general election. 
Only the church appears sur- 
prised that its statements are 
seen as coded backing for the 
Christian Democrat party. 


Men and Matters 


“ financial engineering ” may be 
guilty of “ corruption and some* 


Trading 

insults 


Altogether more unusual has 
been .the attack on immorality 
In Industry ' ■ and', finance 
delivered by Mr Cesare Romitt, 
/the square-jawed boss at Gianni 
Ag nelli's Fiat Stressing the 
need for ethics in business, 
Romiti criticised those looking 
far “ short cuts ” to success and 
those who, under the guise of 


times of illegality.” 

At whom was the gun being 
pointed, it was asked. Not least 
by Mr Raul Gaxdini, the Fer- 
ruzzi chief who has little love 
for either Romiti or Fiat He 
strolled out of an FT confer- 
ence in Milan last Monday and 
demanded that Romiti “name 
names.” Mr Romiti replied that 
one had merely to “ read news- 
papers over the past two years, 
to understand — an apparent 
allusion to the string of take- 
overs by Carlo de Benedetti, by 
Ferruzzi itself and by Mont- 
edison. ‘ 

Over the weekend, the hard- 
nosed Fiat man opened- up 
little more and repeated the 
Agnelli's familiar complaints 
about Mario Schimbemi, the 
Montedison boss, la unching 

takeover bids without first ask- 
ing permission of minority 
.alders such as Fiat, Mr 



“What a Bank Holiday— 
daren’t go oat because of 
opinion pollsters and nothing 
on television except poll- 
tidans” 


De Benedetti, meanwhile; had 
been' raising too mnch money 
on the stock market 
There is no obvious Idiomatic 
equivalent in Italian of the 
“pot calling the kettle black” 
so Mr Romiti’s targets .have, 
been silent on Fiat’s own talent 
for . financial ingenuity. Bnt 
there are few better, examples 
than the Agnelli purchase last 
year of a 5Ubn chunk of the 
Fiat shares -owned by. Libya with 
convertible bonds financed by 
the state, bank, Mediobanca, 
costing an average interest rate 
of 2.6 per cent over 11 years. 


Caretaker 


hospitality 


Meanwhile, the forthcoming 
visit of Ronald and Nancy 
Reagan is causing quite, a 
Burry in the world of Italian 
socialites and business leaders 
anxious to be seen - rubbing 
shoulders with America'^-^firsT 
couple.” ; 

As caretaker Prime -Minister, 
tixe 78-yesrs»ld Amlntore Fan- 
fani is ' nominally the Presi- 
dent's host;, bnt two of Mr 
Reagan’s formal engagements 
during his June 3-12 summit 
visit’ will be hosted by indus- 
trialists. On- June 10 Mr Carlo 
de Benedetti will preside over a 
prestige dinner at Milan’s 14th 
century Costello Sforzesco 
featuring 90 Italian and .'.60 
American* members of the 
private sector initiative.” The 
same assortment of business 
leaders will regroup for lunch 
the next day at' tixe Palazzo 
Grass! museum in Venice 
where the host wQl be Flat 
chairman Mr a gwam 

Among the most excited 
Italian' society ladies awaiting 
the Reagan visit will be 67- 
year-old Maria' Pia Fanfanythe 
prime minister's . fashion-; 
conscious wife. with. a taste for. 
jetting around third- ‘ world- 
countries doing good deeds. At 
a reception in Milas last .week 


for ohe- of her numerous srtf- 
pubQdstng books. “Maria Pia 
(as riie is known to her friends 
in the fashion world) screamed 
across the room to one Ameri- 
can fashion journalist FH- be 
in Venice, at the summit, ru 
be there.” Her embarrassed 
friends smiled. * 


Lyric 

tragedy 


Puccini, by all acdnints L 
would not have revolved in his 
grave when tixe curtain fell on 
Sunday evening on the open- 
ing performance of Madame 
Butterfly at tixe Rome Opera 
House. Bizet however, ? -may 
still be spinning just at the re- 
collection . of the several per- 
formances of his Cannes which 
.were staged in January without 
a chorus. . . 

. This “castrated Carmen”, as 
one critic, qtiled it was>by.‘no 
means the nadir of -one of the 

most terrible seasons -in 'the 
history -of opera inRome. Union 
troubles, - poor administration 
and just plain bad luck have 
meant that the odd trouble-free 
production, which started on 
time with tiie cast as published, 
such as Madame Butterfly on 
Sunday, was tiie exception 
rather than the rule. 

- Individual performances have 
sometimes -failed to -rise to-.the 
occasion' —.the- luckless-tenor 
in Don Pasqnale was indec- 
orously. -whistled off the stage — 
while those, which promised 
much were struck .by sudden 
illness.. The -first; two perform- 
ances of ’Rossini's Italian in' 
Algiers we# cancelled because 
the male lead fell ill without 
ah understudy. . Later, .the 
operatic Macbeth, was struck by 
the 'sort of . bad luck which fa- 
supposed to' strike only *; the 
theatrical version. . . 

The peat Shirley Verrett was. 
too Ql to appear on opening 
night and Ghena Dimitrova was 
drafted up from the San Carlo 
in Naples to keep faith with 
the patrons. Miss Verrett re- 
turned - -too quickly; lost- her 
soprano mid-way and, .in the 
absence tof 'an understudy, the 
musical director -had a row: with 
th e -st alls from' the* conductor's 
rostrum- ' ~ 


Observer 



t- 


j* ’ 


by an East German head of 
government. 

Both plans bnve fallen 
through. The Diepgen visit 
was called ' off earlier this 
month after East Berlin pro- 
tested about “ slanderous 
insults ” made by Mr Kohl, 
who had reaffirmed in best 
tub-thumping manner that West 
Germany could never come to 
terms, with -the “wall and barbed 
wire.” 

TSxe episode underlined « 

. longstanding and fatal draw- 
back in the Bonn Government's 
approach to East Germany. 

. . The official Bonn lino is to 
distinguish between the East 
German regime and the people 
it maintains within the country's 
-guarded borders. So remarks 
intended to appeal to the East 
German . “compatriots" — 
assumed to be longing for to- 
getherness with the Wedt — 
arc often at the same time 
-highly defamatory to the Com- 
munist' leadership, and therefore 
•can- -set back the cause of 
togetherness they are aiming to 
fbster. ' 

An apparently more construc- 
tive' Idea for building bridges 
had been put forward by the 
SPD: This would be for West 
Germany l to give full legal 
recognition; to_ the German 
Democratic Republic— tixe only 
'w’xy.. sav s Mr Guenter Gaiis. 
"West Germany’s former Per- 
manent representative in East 
Berlin under Chancellor 
Schmidt, to open up the way 
for democracy. 

. West Germany (has. however, 
always shrunk from giving full 
legitimacy jp ^ past* G erman 


.a 


:* sin 


The Case of 
the Tailor’s Hands 


(frooi an unpublished - 
. a/ venture of Mr. Sberiock 
Holmes) 

“But Holmes, how on 
earth did you deduce that 
our mysterious visitor 
.acquired his wardrobe 
r^-towear - and from 
Chester Barrie?** . ' 

‘“Crane now, Wason. The 
man had not been in 
London long enough to get 
niade-to-raeasure garments, 
yet everything about him 
said, ’Savile Row* Surely 


you observed the 
band-made button holes .and 
the natural bora buttons? ■ 
The precision of the 
stitching indicated skilled 
hands - using pure silk • 
thread - 1 fency. And there.-' 
was the unraistateabic * 
effect of hand-pressing with- 
the heavy gas-iron" 

, **So Chester Barrie .. 
shorted their hand?" 

. *E*sUent, Wats6n. LUce 
me, they have their 

methods" 



\4zu1e 

n ow IgNDQM 

- 32 Savile Row London . * 











t 



r 


Financial Times Tuesday May 26 1987 


23 


At war over Irish neutrality 


THE TZREDEST joka in 
Ireland this month is that the 
Single European Act is some- 
thing to. do with continental 
sex for the unmarried end that 
is why the Church is against it. 

Xn fact, the Roman Catholic 
church has declined to advise 
people on how to vote in' 
today's referendum on the act. 
but many of its members have 
launched themselves into the 
"no" campaign with leaflets 
saying things like: **In the 
tragic event of a yes vote, abor- 
tion and many other evils seen 
as social rights in Enrone could 
be enforced in Ireland." . 

At least this undermines 
complaints that the European 
Community and its Single Act 
are too boring to most people 
to make for a lively political 
debate. 

Xt has. however, exasperated 
most' of Ireland’s senior politi- 
cians who are desperately 
anxious that today's vote 
should not only endorse- -the 
act — which only Ireland out 
of the EC’s 13 members has 
so far failed to ratify — but 
should also sound an unequi- 
vocal restatement of Ireland's 
commitment to the Community. 

Their hopes were buoyed by 
an opinion poll published , in 
the Irish Times last week show- 
ing those in favour well ahead, 
by 40 per cent to 21 per cent 
But a hefty 88 per cent remain 
undecided. 

The referendum became 
necessary when the Irish 
supreme court ruled by a 8 — 2 


majority last month that the 
foreign policy aspects of the 
act — which commits member 
states to try to formulate a 
European foreign policy — 
went against the ultimate right 
of the Irish people to decide 
national policy, enshrined in 
tire republic's constitution. 

This effectively invalidated 
the approval of the act by the 
Irish Parliament last December 
and raised doubts over other 
International commitments 
made by parliament, such as 
the Anglo-Irish agreement of 
1885 and even Ireland's mem- 
bership of tiie United Nations. 
The latter case is wren more 
extreme: - Duhlia is bound to* 
abide by Security Council deci- 
sions it may have had no part 
in- arriving at. 

While these implications will 
have to be dealt with in due 
course, the immediate priority 
wa« to amend the constitution 
to a pprove the act — hence 
the referendum. 

It- has sparked a many-sided 
debate which has amounted to 
a wide-ranging assessment of 
Ireland’s membership of the 
EC and its future prospects 
within the Community. 

beW joined the European 
Community in 1978 at the 
time as Britain and Denmark. 
The two main political parties. 
Fianna Fail- and Fine Gael, 
were enthusiastic and a .refer- 
endum returned a majority in 
favour of more than 80 per 
cent. This did much to foster 
an image Irish leaders like to 


cherish of the Irish people as 
“ good Europeans- ” 

Membership was seen as an 
opportunity to. move out from 
under the shadow of Britain, 
the former colonial ruler, into 
a group where Dublin bad an 
influence out of all proportion 
to its size. There were also 
hopes that the partition of 
Ireland . and ■ the problems of 
Northern Ireland might be 
eased by both parts of the 
island sharing membership. 

Economically, joining the 
Community had its biggest 
effect on agriculture. Ireland 
depends on fanning to a greater 


to the Community. 

The country his also been a 
heavy net beneficiary of EC 
development funds. These 
amounted last year to more 
than X£900m, or 6 per cent of 
gross national product At a 
time of acute budgetary Im- 
balances which are crippling 
the economy, access to these 
funds is cruciaL 

Being in the EC has also 
been a key factor In attracting 
foreign companies, which now 
employ more than 80,000 and 
are the backbone of manufac- 
turing and exporting. 

No wonder, then, that Mr 


Ireland votes today on the 
Single European Act. Hugh 
Carnegy reports from Dublin 


degree than any of its partners 
and access to a system of 
guaranteed prices fuelled a 
long-needed surge of moderni- 
sation. . 

Irish firming is now smarting 
from attempts to reform the 
Common Agricultural Policy. 
The shift bade towards market 
imperatives is exposing weak- 
nesses in the mihi dairy and 
beef sectors which have grown 
to rely heavQy on EC price 
supports. But the farmers* 
org anisati ons remain firmly in 
favour of full Irish commitment 


Charles Haughey, the Prime 
Minister, is making modi of the 
economic importance of ratify- 
ing the Act especially as it 
promises more funds for poorer 
regions. Irish politicians are 
terrified that a “ no " vote 
would end goodwill towards 
Ireland within the EC and 
jeopardise ' access to the 
country's most important ex- 
port markets, not to mention 
.the special discretionary funds 
from Brussels. 

But opponents of the act are 
unimpressed by what they scorn 


as "begging-bowl" attitudes. The 
Community, mwnh»r«>itp of 
which has not prevented 19 per 
cent unemploy m e nt in Ireland, 
would have to meet Ireland's 
objections if the act is rejected, 
they say. They make much of 
the potential threat to govern- 
ment revenues from tax har- 
monisation proposals in the act. 

. The economic argument is 
not their most fertile ground, 
though. Neutrality is. 

Ireland's unique position in 
the EC as the sole non-member 
of Nato is nowhere specifically 
mentioned in the act The safe- 
guards of neutrality inse rted 
into the act by Irish negotiators 
are contained in phrases which 
limit discussions on security to 
"political and economic, aspects." 

This has failed^ to satisfy 
many Irish who regard 'the act 
as a slide down a slippery slope 
into Nato. 

Preserving neutrality remains 
a potent political cause. After 
Dublin cut its ties with Britain, 
neutrality became a crucial 
assertion of Independence from 
its erstwhile master, a way of 
minimising continued political 
and military influence from 
London. Dublin stayed out of 
the Second World War prin- 
cipally for this reason. 

In the post-war period, Ireland 
identified strongly with smaller 
nations emerging from colonial 
rule and played a role to this 
end in the United Nations in 
which Its neutrality was, again, 
an important element in its 
independence. 



.. Nova&mi-MEW 



Today, however, conditions 
have altered as Inland finds 
itself out of step in military 
matters with its European 
partners. For some time, this 
has been shrugged off with an 
attitude summed up by one 
politician as, "We’re neutral, 
but we know which side we're 
on.” 

The Fianna Fail government, 
in this campaign, has asserted 
its unequivocal commitment to 
neutrality and made something 


of the "honest broker” inter- 
mediary role that Ireland can 
play in Europe because of its 
neutral stance. But the impres- 
sion remains that Irish neutral- 
ity is increasingly in need of 
redefinition. 

Even if it Is true, as Dr Gar- 
ret FitzGerald, the former prime 
minister, says, that the single 
European Act "has damn all to 
do with neutrality,” ne himself 
complains of the strictures put 
on Irish leaders by what he 
calls "neutrality neurosis.” 


Uartyn Tumar: trial) Tima* 

An example is when EC heads 
of state discuss disarmament 
issues informally, at a summit 
dinner. An Irish prime mini- 
ster is obliged to stay silent, 
something Dr FitzGerald says he 
felt particularly awkward about 
after last year's Reykjavic sum- 
mit between President Reagan 
and Mr Gorbachev. 

”1 saw nothing in staying 
silent, but I felt it was prudent 
unless someone should ask 'did 
you speak' and it would be seen 
,as an unneutral act.” 


THERE is nothing new about 
the voter as chessplayer. No 
nineteenth-century elector 
would have been surprised or 
shocked -St the ides that voting 
was a game to be played with 
maxim um ingenuity. Until 1918 
voting was spread over s fort- 
night, the results in some con- 
stituencies being known before 
the poll opened in others. Until 
1885 most constituencies re- 
turned two members: the elec- 
tor could concentrate his sup- 
port by "plumping," Le. voting 
for one candidate only, or iso- 
late the Radical by voting Whig 
and Tory, or isolate the Toryby 
voting Whig and Radical. Be- 
fore the 1872 Ballot Act one 
could know the running total 
of the poll as it progressed. 

Xt is <»ly with the coming of 
the secret ballot, universal 
suffrage and strict party discip- 
line that the decline of the 
voter from strategist to foot- 
soldier took place. But even in 
the heyday of party stability, 
as in the 1960s and 1960s. the 
foot-soldier analogy was not 
quite the whole picture. Poli- 
ticians, journalists and acade- 
mic writers tended to assume 
that elections were decided by 
a tiny band of floating voters. 

The reality, as tile research 


Endgames for the tactical voter 


by David Butler and Donald 
Stokes first showed, was always 
more complex. The fact that 
the overall swing from one 
election to another in the 1950s 
and 1980a was low— it exceeded 
3 per cent only once, in 1904 
— contributed to the illusion of 
stability. But the total number 
of people who switched from 
one party to another, or into 
and out of abstention, from one 
election to the next was much 
higher. 

Between 1959 and 1964 there 
was a swing from Conservative 
to Labour of 3.4 per cent hot 
85 per cent of electors under- 
went some change of allegiance 
—with tiie tide, against the tide, 
into and out of the Liberal' 
party and abstention. Between 
I960 and 1970. with a swing of 
48 per cent the total number 
of changers was almost the 
same, 34 per cent . 

There was therefore always 
a large number of electors 
whose loyalty was conditional 
and uncertain, open to persua- 


sion on a large number, of 
grounds. Does that mean that 
the British elector is no more 
volatile today than 35 years 
ago? 

No: volatility has increased 
in several respects. In the first 
plan there are dramatically 
fewer ultra-loyal foot-soldiers. 
In 1964 40 per cent of electors 
declared themselves as "very 
strongly ” affiliated to their 
party; in 288S it was 23 per 
cent By-election upsets have 
become more frequent and 
spectacular. Voting intentions 
as recorded by opinion polls 
have fluctuated more violently. 
The Alliance, which touched 50 
per cent at the end of 1981, 
after Shirley WiBUms’s Crosby 
fay-election victory, embarked 
on tiie general election cam- 
paign, 18 months later, at 38 
per cent The total number of 
people actually changing their 
vote compared with the pre- 
vious election may not have 
risen, but those who are pre- 
pared to change, and are open 


to persuasion, are vastly more 
numerous. 

The decline of partisan 
loyalty would not by itself be 
an encouragement to tactical 
voting if the major party duo- 
poly were still intact What 
gives the question of tactics Its 
present salience is the emer- 


Affirmers — those who would 
vote for their party if it put up 
a pig — and the Choosers — those 
who hesitate before jumping. 

Afflrmers are a bad prospect 
for tactical salesmen. Voting 
is for them a declaration of 
loyalty. In so far as it has a 
utilitarian justification, it lies 


Labour to SDP or from Tory 
wet to Liberal He is the ideal 
prospect for the tactical sales- 


By Peter Pulzer 


gence of the Alliance and. in 
Scotland and Wales, of the 
nationalist parties. 

The preconditions for the rise 
of tactical considerations are 
twofold: the existence of more 
than two main parties and a 
very wide spectrum of political 
opinion, in which relatively few 
electors firmly identify with 
their preferred party and a 
great many have an ideolo- 
gically eclectic range of views. 
What has happened is a shift 
in the relative strengths of 


in imn< miring the popular vote 
for one's party, even though one 
lives in a hopeless or ultra- 
safe seat. To the Afflrmer the 
immediate outcome in a par- 
ticular constituency Is secondary 
to ensuring the long-term 
national viability of his party. 

The Chooser is not necessarily 
a more rational or better in- 
formed person than the Affir- 
mer. He is merely less certain 
in his attachment. His attitudes 
cover a range of possible alle- 
giances, say from moderate 


During the Greenwich by- 
election Conservative canvas- 
sers reported that many of 
their supporters intended to 
vote SDP to stop the dreaded 
Deirdre Wood, but would re- 
turn to the fold at the general 
election. Here was the Green- 
wich Tory as chess-player, 
ordering his or her move ac- 
cording to changing circum- 
stances. Closer examination re- 
vealed more complex motives. 
Of those who stayed loyal to 
the doomed Conservative can- 
didate three times as many 
named defence as an import- 
ant issue as did switchers to 
the SDP. Of those who switched 
38 per cent named education 
and 35 per cent health as im- 
portant, compared with 28 and 
24 per cent respectively among 
loyalists. 

Affirm ers and Choosers are 
therefore not merely indi- 


viduals who make different 
decisions about the best move 
in the game. They are different 
kinds of people. They are more 
mobile electorally because they 
are more mobile ideologically. 

Tactical considerations alone 
do not explain the collapse of 
the Labour vote in the south to 
the benefit of the Alliance. 
There was, after all, a time, 
not so very long ago. when 
Labour got a third of the vote 
in Richmond and the Isle of 
Wight, out-polling the Liberals, 
and when Bath. Cheltenham 
and Yeovil were Conservative- 
Labour mar ginals Diminished 
loyalty has to precede electoral 
mobility. The current Tactical 
Voting *87 Campaign has to 
assume not merely that elec- 
toral choice is motivated at 
least as much by dislike of the 
opponent as by love of one's 
own party, as it has always 
done, but that love, as cur- 
rently diluted, is transferable 
on a large scale. 

If I am right, then whether 
it succeeds will depend as much 
on issue perception as on vague 
graphs pushed through people’s 
letter-boxes. Frima fade the 
Alliance has most to gain from 
tactical voting, having come 



second last time in 309 out of 
the 633 mainland constituencies. 
But what trill the Alliance 
supporter do in a Conservative- 
Labour marginal? We know 
that among current Alliance 
supporters 31 per cent think 
the Conservatives have the best 
defence policy, against 10 per 
cent for Labour, and that 61 
per cent prefer Labour's policies 
on jobs to 5 per cent for the 
Conservatives. That could be 
& vital due. We shall see. 

The author is Gladstone 
Professor of Government and 
Public Administration at Ox- 
ford and a Fellow of All goals. 


Exchequer to 
lose on tin 

From Sir Adam. Ridley 

Sir , — May I add two com- 
ments to Dr Hermann's penetra- 
ting and authoritative article of 
Kay 7 on the Tin Council and 
the legal confusion and litiga- 
tion which Its collapse has pro- 
voked. 

There it a farther 
consideration of economic costs 
and benefits to note, which 
strengthens Dr Hermann's 
arguments that the UK’s ob- 
structive attitude to the XTCs 
creditors is not in the national 
Interest There is a simple cal- 
culation which tiie Government 
should malm, when comparing 
the implications of settling Its 
shire of the creditors claims 
with successfully resisting legal 
pressure to do so, as It is now 
trying. If the governments have 
to settle, the UK's -share of the 
total debts to be paid woukl only 
he about 4 per cent But if there 
is no settlement, then tiie bro- 
ken and banks involved wBl be 
able to set off much of their 
losses agaimft UK Corporation 
Tax. The Ion borne by the fix- 
chequer would then amount to 
some 49 per cent of the total 
debts attributable to the ITC In 
other words the Government, 
not ' to mention tiie national 
economy, loses mi a very large 
scale if the present strategy of 
avoiding a settlement is fol- 
lowed successfully— by about 
ten times more than if it settles. 
The Treasury has not denied 
this estimate when offered tiie 
chance to do so. 

Given tiie highly unsatisfac- 
tory situation ana tiie many 
important areas of legal confu- 
sion left fay the Tin Councils 
collapse, it is timely for Edin- 
burgh University So be seeking 
funds to appoint a profeasor of 
International law who can study 
matters such as these. Any seri- 
ous bank should consider sup- 
porting such an initiative, as 
Dr Hermann xueicegts. 

(Sir) Adam Ridley> 

Hambros Bank, 

41 Blshopsgate, ECSL 

Running a 
risk 

From Professor G. Aflett. 

Sir,— 'Your concern Oder 30) 
over the absence of compassion 
In tha language of the Tory 
manifesto em in immoderation. 
X find toe manifesto’s attitude 
nauseating and wonder if com- 
fortably placed Co nserva tives 
ever wonder There, but for 
the grace of God . . . But, 
equally I have no desire to see 
our government handed over to 
the unilateralists. 

In its meanmindodneas over 

social speeding the Conservative 
Party la running a terrible risk, 
which no prudent nozhSocialist 
politician should accept, of giv- 
ing Mr Klnnoek the key to No. 
10. X just cannot understand 
how the party which claims to 
defend the realm it prepared re 


Letters to the Editor 


take inch a chance and cannot 
apparently sense that there are 
great Individual hardships and 
underfunding in education and 
health which, unless acknow- 
ledged immediately as a priority 
for the next Parliament, could 
turn sufficient floating voters 
into an overall Labour victory. 
I expect a. Conserv a tiv e electoral 
strategy to be prudent and not 
go for the gamble of what at 
best will be a close run thing. 

With so much international 
funds, largely Japanese, now 
trying to find a safe haven from 
tiie dollar, there cannot possibly 
be any significant inflationary 
or interest rate risks in borrow- 
ing to Qw»i>g« an extra annual 
£Zbn for social expenditures — 
and they are dwarfed by the 
chance that insufficient voters 
will give due weight to the 
hazards of Socialist defence 
policy. 

(Professor) George Allen, 

West Woodlands, 

Newton Tracey, 

Barnstaple, Devon. 

The Japanese 
at Venice 

From Mr David How eB 

Sir. — Mr Martin Feldstein’s 
views (May ») on the future 
trend of exchange Trteaare wen 
known and he is probably right. 

But Mr Feldstein’s sugges- 
tions as to what might be said 
and done at the forthcoming 
Venice economic summit to calm 
tiie continuing currency turmoil 

fan well below the level of what 
is required. Most of tiro under- 
taking* he asks the heads of 
state to make have already been 
given in some form and win no 
doubt be repeated. Few of them 
win have much effect in restor- 
ing world confidence and 
momentum. 

A far more hopeful time wu 
mentfofmd in your editorial 
Ofay 11) on ideas for recycling 
Japan's vast trade surplus. 
When he met with President 
Reann on Hay 1, Mr Nakasone 
spoke of an additional SSObn 
over three years which Japan 
might channel to indebted 
developing countries. 

Since then, as yon report; Dr 
Saburo OJdta has proposed In 
Tokyo that the figure should be 
more like S125bn, possibly 
spread over . five years, and 
administered in part through 
the World Bank. ^ 

Evidence at Venice that these 
were serious plans, properly 
worked out; would of Itself 
immediately start to restore 
confidence, begin .the pncm of 
recovery from the debt crisis 
and raise the prospects of in- 
creasing dollar exports and 
eastogthe trade imbalance. 

The Japanese need to arrive 
at Venice with something on the 


scale of a Marshall Plan to meet 
the drifting and deteriorating 
situation. By chance, at tire 
last Venice summit in 1980 — 
which I attended with the Prime 
Minister— Dr OUta was the sole 
ministerial representative of the 
Japanese, who were then in the 
middle of a General Election. 

I hope they will send him 
again— and that this time he 
and his colleagues will have a 
full mandate to put forward 
firm proposals on the scale 
which events now urgently 
demand. 


David Howell, 

DoEpMn House. 

Chertsey Street, 

Guildford, Surrey. 

A squeeze in 
potatoes 

From Mr N. McLeod 

Sir. — Trading on the London 
Potato Futures Market has now 
ceased for the 1986 crop and 
farmers and merchants can 
reflect on tire effectiveness of 
the. futures market to follow 
the physical potato market It 
is interesting to note that the 
November position finished 
with a premium of about £15 
over the Potato Marketing 
Board average for that week, 
in February there was a dis- 
count of £8, whereas in April 
the premium was £60 and in 
Kay £20. It can be seen from 
these figures that a major dis- 
tortion took place In April. 
This is very surprising when 
one consi ders that there was 
an AFBD inquiry and an in- 
vestigation by the Bank of 
England who both found so 
evidence of a squeeze. Yet for 
a . distortion, of £40 to have 
taken place there could only 
have been a squeeze, because 
that is the only cause of dis- 
tortions on futures markets. 

Xt Is therefore essential that 
a major government Inquiry 
Is instigated immediately to 
discover the ' true facts from 
everyone Involved. The f a rm i n g 
industry must fight for a change 
in the rules of the market and 
if the management committee 
cannot supervise the market 
properly, then an advisory com- 
mittee drawn from the potato 
trade should be formed to guide 
them. 

Several thousand tonnes of 
Dutch potatoes have been un- 
necessarily imported just to 
satisfy speculators who got it 
wrong: As several of these 
potatoes have gone to s m a ll 
grading stations and farms, 
there must be a very real 
danger that the disease 
rhizomania is now present mi 
our land with catastrophic im- 
plications for Beresfordb, 


British Sugar and the farming 
industry. What - right does a 
small group of City people have 
to destroy the potato trade and 
the sugar industry for their 
personal gals? It is essential 
tha* this kind of behaviour is 
stamped out now, because If it 
is not, then City scandals will 
grow even greater and eventu- 
ally the City of London will 
suffer the consequences. The 
time to act is now; with a very 
heavy hammer. 

Neil C. McLeod. 

Longham HaU. 

Longhorn. 

East Dereham, 

Norfolk. 


Regularise the 


grey market 

From the Editor, 

The Shareholder. 

Sir,— There has been a good 
deal of criticism about private 
investors "making a fast boric” 
by selling their Rolls-Royce 
shares immediately for a quick 
profit. But Eiven the ludi- 
crously small allocations to 
small shareholders, what other 
choice did many have? Even at 
the end of the first day of deal- 
ings the TTirnimuHw allocation 
was worth a hare £220. a con- 
sideration so paltry as to be 
more of a nuisance to hang on 
to than anything else, particu- 
larly since the costs of selling 
small amounts of shares have 
risen since Big Bang: 

Were any investor gives a 
small allocation in a new issue 
to want to buy more, nothing 
can be done until the first day 
of dealings proper, by which 
time it is often too late. Yet in 
the gflts market, dealers can 
trade in “when issued" stock 
once the price has been an- 
nounced. Why should such a 
practice not become common- 
place in tire equity market too? 
There was until recently a 
thriving.- “grey market” in 
shares but the government per- 
haps perceiving that many 
small invertors wanted to sen 
their shares, made dear its dis- 
approval. This market is now 
restricted to larger, profes- 
sional investors. 

Surely there is a ease to be 
made for regularising the grey 
market? Investors who are 
going to sell ont Immediately 
may still be numerous, but it 
would then give those share- 
holders who want to increase 
their holdings in advance of 
regular trading a chance to 
amass enough shares to make 
a worthwhile ho l di n g. 

The government may profess 
its radicalism with regard to 
tire stock market. But it is still 
selling shares in the time- 
honoured manner, with little 
or no regard for the fact that 
it has generated a considerable 
appetite for new issues outside 
the usual institutional clien- 
tele. Can’t somebody come up 
with a better way of handling 
privatisation sales? 

Simon Rose. 

187, Wimbledon Park Road, 
SW1S. 



Jr.-') 


IN TOUCH 

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1 




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answers* 


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twmm lodowrtal P mJupwng . 

if 76-78 Lo^pKe. 

p., SMIHUIIW. 

UtyurU Til: 046222282* 


FINANCIAL TIMES 


Tuesday May 26 1987 


TROLLOPE & COLLS 

oirr 

MAWTEKANCE 4«g 

01-377 2500 


Peter Brace in Tokyo reports on Nakasone’s tactics for next month’s summit 


Japan’s last card before Venice 


MR YASUHffiO NAKASONE, file 
Japanese Prime Minister, this week 
begins what may be his last chance 
in office finally to conquer Ameri- 
can and European hostility to Ja- 
pan's trade practices and surpluses 
around the world. 

In what amounts to a combined 
charm and action offensive, Tokyo 
is preparing to confront its major 
trading partners with a fistful of po- 
litical, fiscal trade initiatives 
designed to take the heat off Japan 
at the summit of the West’s seven 
major economic powers in Venice 
in two weeks' time. 

As a start, the Government plans 
to bring a formal end in the next 
few days to negotiations with the 
US over Japanese participation in 
the Strategic Defence Initiative 
(SDI) research programme. Bonn, 
London and Rome have long since 
joined the effort and Japan, as 
Washington's major military ally in 
Asia, has been noticably absent 

Next week, senior Japanese fi- 
nance Ministry officials are due to 
travel to Washington and London 
carrying updated commitments to 
liberalising the country's highly re- 
gulated financial markets. They are 
expected to finalise arrangements 
allowing some foreign firms to be- 
gin offering limited discretionary 
investment services in Japan and to 
detail new plans to involve foreign 
companies more in underwriting 
Japanese Government bonds. 

The Japanese team is also likely 
to use these regular consultations 
to promise faster action on opening 
up the Tokyo Stock Exchange to 
foreign brokers and to point out the 
Government's efforts in the past 
few weeks to talk down short-term 
interest rates and so help the dollar 
to strengthen. 

But for Mr Nakasone, the arid 
test in Venice will be the reception 
given to an emergency of gnomig 


package - a supplementary budget 
-worth about YS.OOObn ($35bn) that 
his Cabinet should formally adopt 
on Friday after a final negotiation 
on its make-up today. 

Mr Nakasone promised to do 
something to reflate the dormant 
Japanese domestic economy when 
he met President Ronald Reagan in 
Washington at the end of March 
and Mr George Shultz, the US Sec- 
retary of State, was probably bang 
more than just a little impish when 
he wrote to his Japanese opposite 
number last week to say how much 
he was looking forward to hearing 
details of the package when they 
meet in Venice. 

The supplementary budget, due 
to be put to a special parliamentary 
session later in the summer, will 
follow the final approval last week 
of an austerity budget for fiscal 
1381 . Mr Nakasone damaged his po- 
litical profile during the budget de- 
bate by fighting in vain for the in- 
troduction of a sales tax. 

The sales tax was to have been 
part of a bigger three-year reform 
programme, which would have in- 
cluded balancing income and corpo- 
rate tax cuts worth about Y4,900bn. 
Now, however, the planned supple- 
mentary budget wifi contain only 
tax cuts - possibly worth Yl,300bn 
and mostly in income tax reduc- 
tions which would hove been part of 
the failed r ef o rm . 

The rest of the Y5,000bn is, ac- 
cording to widespread speculation, 
going to be made up by bringing 
forward and increasing public 
works spending and by steps to en- 
courage greater private sector in- 
vestment The state may agree to 
contribute more than its traditional 
5 per cent to joint private-public 
ventures and to finarntg Y150bn in 
home mortgage write-offs, but the 
economic or revenue effects of 



Mr Yasuhiro Nakasone 


these steps are impossible to mea- 
sure. 

Even if Mr Nakasone’s fellow 
heads of government and state are 
impressed by all this in Venice, 
however, the package appears to be 
heading for a poor reception in To- 
kyo. 

"At least its better than last 
year," was the best one senior US 
economist could muster yesterday. 
Last November, the Nakasone Gov- 
ernment put a Y3,600bn supplemen- 
tary budget to the Diet and "only 4 
per cent was zeal" he said. 

Supplementary budgets and the 
“front loading” of public works con- 
tracts are common in Japan and 
new money involved is often diffi- 
cult to separate from fluids already 
budgeted and which are merely be- 
ing re-manipulated. This time, how- 
ever, there does appear to be about 
Yl,7O0bn in extra public works 
spending available which, com- 
bined with the tax cut, means that 
at least Y3,000bn of foe Y5,fl(H)bn 
will be “reaL" 

Even that has to be qualified 
however. The tax cut may be neu- 


tralised next April when foe Gov- 
emment intends, if not to try again 
to introduce a sales tax, then at 
least to try to raise some indirect 
taxes. The tax art may have to be 

imple ment ed very quickly for it to 

have any effect at all 

It is also not dear yet how foe 
supplementary budget is going to 
be fmancwL Higher-foan-expected 
tax revenues from last year may be 
carried forward and the proceeds 
from selling off stock in Nippon 
Telegraph and Telephone (NTT) 
might also he tapped. 

Mr Nakasone has a few other 
sweeteners to offer in Venice but be 
may be careful not to sell them too 
hard. Tokyo is, for example, touting 
a S30bn scheme - also promised in 
Washington - to recycle same of its 
trade surplus to indebted Thir d 
World countries. But an closer ex- 
amination it transpires that SlObn 
is part of an older Finance Ministry 
plan to fund a World Bank scheme 
and that almost half foe remaining 
$20bn involves the as-yet unsecured 
participation of the private sector. 

Barring a political Ve- 

nice will be Mr Nakasone'* last 
summit among foe so-called Group 
of Seven. His tenn of office as lead- 
er of Japan's ruling liberal Demo- 
cratic Party, which has already 
been extended, expires at the end of 
October and be cannot openty cam- 
paign for re-election. 

Weekend polls show some 80 per 
cent of Japanese voters do not want 
him to continue in office anyway, 
which is a long way for a man so ap- 
parently wen regarded in foe West 
to have fallen. 

Even if he were to scare prints in 
Venice -perhaps by persuading Mr 
Reagan to lift his 100 per emit pen- 
alty tarifs on imported Japanese 
electronics goods early - Mr Naka- 
sone's electorate appears to have fi- 
nally had enoug h austerity. 


Noranda to float 15% of C$2bn 
forest products subsidiary 


BY STEFAN WAGSTYL IN LONDON 


NORANDA, foe Canadian re- 
sources group, is planning the flota- 
tion next month of its forest prod- 
ucts subsidiary. It will be foe larg- 
est company ever floated in Cana- 
da, with a likely market value of 
more than C$2bn (S1.48bn). 

The group intends to sell about 15 
per cent of Noranda Forest to raise 
between CS3DOm and C$350m, foe 
biggest Canadian offer for sale 
since Dome Petroleum, foe US en- 
ergy grotty, sold off put of Dome 
Canada, now called Encor for 
C$400m in 198L 

Noranda is selling assets to cut 
debt mid to try to devolve control of 
its separate businesses. Mr Bill 
Deeks, a senior executive, says that 
in about two years time the group 
could float Noranda Metals and 
Minerals, its minin g and energy op- 


erations, »nd the n some time later 
sell shares in Noranda Manufactur- 
ing, with interests inchidmg alu- 
minium refining. 

Mr Deeks, president of Noranda 
Sales, foe group's metal marketing 
company, said the strategy was the 
result of a large-scale reorganisa- 
tion of Noranda. The company, 
which is controlled by the Toronto 
conglomerate Brascan, has been 
struggling in recent years through 
the effects of heavy debts and low 
commodity prices. 


is to be sold outside Canada. A 
promotional team is to visit Lon- 
don, Frankfurt and Zorich. 


Noranda Forest is headed by Mr 
Adam Zimmanan, Noranda’s for- 
mer president The company owns 
49 per cent of MacMillan Bloedel 
foe big forest products company, 
100 pa cent of both Fraser, a New 
Brunswick timber and paper pro- 
ducer, and James Madaren Indus- 
tries of Quebec, plus 50 per cent of 
Northwood Pulp and Paper, based 
in British Columbia. 


Noranda has filed a preliminary 
prospectus for the Noranda Ernest 
issue, intending to price and float 
the company in the last week of 
June. Dominion Securities, the Tor- 
onto broker acting as lead undo- 
writer, says 25 per cent of the stock 


The issue follows last year’s suc- 
cessful public offering by Noranda 
an d its partners of shares in Ttemip 
Gold Mines, one of three mines in 
Ontario exploiting foe largest gold 
deposit discovered in North Ameri- 
ca since foe Second World War. 


Warning by 
Bundesbank 


Continued from Page 1 


ing deflected into short-term mea- 
sures, said it would be disastrous to 
fall into the temptation of a return 
to old stop-and-go policies. 

Although Germany was not cur- 
rently threatened with renewed in- 
flation, he said: “The ‘incubation pe- 
riod' of inflationary processes is 
long, uncertainly long, and the size 
of the resulting price rises is also 
uncertain." 

Thus, he added, "a policy of over- 
plentiful money supply should not 
be continued without limit" Steady 
economic growth was only posable 
on the basis of stable money values. 

Against the backgro und of the 
slowdown in German growth, as the 
strong D-Mark has inhibited ex- 
ports, Mr Schlesinger said an upper 
limit of only 2-5 per cent annually 
was likely for foe next five or more 
years. This was because of the de- 
clining population, shorter working 
hours in industry, and increased in- 
vestments in environmental protec- 
tion. 


Share sale planned 
for troubled El A1 


BY JUDITH MALTZ IN TEL AVIV 


SHARES in El Al the Israeli na- 
tional airline which is in temporary- 
receivership, may he floated on fo- 
cal and foreign stock exchanges, in 
a reversal of previous government 
policy. 

Since the airline was put into re- 
ceivership in 1982, the Government 
has repeatedly declared itself open 
to offers for an outright purchase. 
But, in practice, considerable mis- 
givings have persisted over relin- 
quishing state control of foe airline. 

The Government appears to have 
changed its mind about the method 
of privatisation to be employed as a 
result of an offer received last July 
from Mr William Belzberg, the Ca- 
nadian businessman who heads foe 
First City Group. The offer was dis- 
missed by the Government as too 
low. 

The Israeli Transport Ministry 
had estimated El Al's value at about 
$890m, and insisted that any pur- 
chaser take over outstanding debt 
of 5340m, putting a total price tag 


on foe airime of SUbn. Mr Belz- 
berg's offer amounted to only 
$3 1 6m free of debt, barely a quarter 
of foe estimate. 

Mr Ze’ev Refuah, head of the Is- 
raeli Government Companies Au- 
thority, said that after years of un- 
successful attempts to sell El Al to 
private investors, he had now con- 
cluded that a share sale to the pub- 
lic would provide the best return for 
the state. 

No decision has been taken on 
fog timetable of any privatisation 
move, unlikely to be launched be- 
fore the end of 1888. Mr Refuah 
said that as a precondition foe air- 
line would have to stand on its own 
feet again for at least 12 months af- 
ter the lifting of its receivership, ex- 
pected by the end of this year. 

After several years of losses, El 
Al expects to be in foe black during 
its current financial year. A spokes- 
man said profits in the year to 
March 1987 would be in the S6m to 
S12m range. 


Gold Fields 
may cancel 
US flotation 


By Stefan Wagstyf In London 


CONSOLIDATED Gold Reids, foe 
international mining grotty, is rec- 
onsidering plans to float off its US 
gold company. 

Late last year, the group, which 
was then foe subject of takeover 
speculation, dropped strong hints in 
foe City of London that it might sell 
shares in Gold Fields Mining Cor- 
poration (GFMQ, which could be 
worth Slim, as early as this spring. 

On Friday, foe group said: The 
whole question of whether we float 
GFMC and when we do is under 
consideration." 

The issue has provoked a wide- 
ranging debate within foe grotty 
about future strategy, particularly 
the question of whether subsidia- 
ries should be wholly or parity- 
owned. 

The company no longer feels un- 
der foe same pressure to act quick- 
ly as it did last December when 
American Barrick Resources, a Ca- 
nadian gold company, revealed it 
held 49 per cent of Gold Fields. 

Gold Fields called in foe Depart- 
ment of Trade and Industry to start 
an investigation into how American 
Barrick had acquired its shares, 
fearing foe possible involvement of 
Anglo American, the South African 
combine, which indirectly holds 28 
per cent of Gold Fields. 

Gold Fields stock has since risen 
from 650p to UOflp on Friday, put- 
ting a value of £23bn on the group, 

Gold Fields originally suggested 
that it might float its US company 
in 1988 after its third North Ameri- 
can gold mine came into produc- 
tion. But last December senior ex- 
ecutives hinted that a flotation as 
early as spring 1987 might be posa- 
ble. 

The grotty said yesterday foot the 
earliest possibie date was now early 
July. But it said that the derision 
whether to float at all had yet to be 
taken. 

Some Gold Fields executives 
argue that the group should contin- 
ue to follow the traditional policy of 

a mining finanoo house fo. finJmg 

and .developing mine,? and then 
floating, thero so as to use the capi- 
tal in new projects. 


World Weather 



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Duty-free shopping 


Continued from Page 1 


Buy sports shoes in Ireland, 
where they are 88 per cent cheaper 
than in Denmark, but go to Greece 
for tennis rackets, although the 
choice is limited, warns Beoc. 

Apart from helping shoppers, the 
political point of foe survey is to 
show just how far the EC is from 
achieving a common European 
market 


Many of the differences can be 
explained by currency fluctuations, 
but variations can even be huge 
within member states themselves. 
Changing money at the airport or 
station can often cost much more 
than at a bank, explains foe 
booklet. 

London emerges as the titv with 


foe biggest traps -for the unwary 
when it came to changing money, 
followed by Brussels, Paris and Du- 
blin. One Beuc investigate was 
quoted £31.61 for DM 100 at three 
London railway stations, only to 
find that he could have got £2 more 
for his money - E33J8 - at a bank. 

"It’s scandalous said Ms SDnUe 
Toxber, Beac’s economist "Travell- 
ers often go to the first place they 
find because they are in a hurry to 
change money. These places sh o ul d 
be obliged to have proper displays 
of their costs.” 


Bent Voyage. BFr 100, Beuc, 29 
rue Royale, bte 3, B-1000 Brussels, 
Belgium. Available in English and 
French. 


Issues not 


an issue 


in run-up 
to Italian 
elections 


FROM Italy, which like the UK is in 
foe midst of an electoral battle, 
British newspaper comments at the 
start of Mrs Margaret Thatcher’s 
bid for a third term as Prime Minis- 
ter Kerned breathta kingly confi- 
dent in their nggwrrpiitiTu Opinion 
polls, the recent local elections and 
journalists’ own “seise" of public 
opinion all ted, quite reasonably, to 
predictions of a Thatcher victory. 

By contrast in Italy, which has 
never known the turbulent changes 
in electoral mood which occasional- 


John Wyles In Rome 
explains why Italy 
and the UK are polls 
apart 


ly upset British election forecasts, 
no cme has a due about foe likely 
outcome of the election on June 14. 

Polls can offer only foe vaguest 
guide and avoid trying to predict 
voting intentions because of the 
proliferation of parties and re gional 
variations in allegiances. 

Nor do Italian newspapers and 
television carry much feedback 
from "piazza", foe press bring more 
interested in purveying than recriv- 
m g opinions. 

The smart money in Italy, as al- 
ways, is on their bring very little 
change in the di stri b u tion of votes 
between foe 10 main parties which 
made up the last parliament But 
not even smart money tells you 
much because even a small change 
in the share-out - say, 2 percentage 
prints between foe Christian Demo- 
crats and foe Socialists - could have 
a dispr op ortionately huge political 
impact on foe leadership and cam- 
position of foe not government 

In the three weeks since foe Hal- 
ian parliament was dissolved, foe 
rhetorical gunfire of party battle 
has not aimed at anything as pul- 
pabte as an issue. Rather, the main, 
indeed, the only real preoccupation 
of foe p oliticians is the shape of foe 
gover nment coalition after June 14. 

While making for a tedious cam- 
paign, the obsession is understand- 
able because the perfectly propor- 
tional Italian system does not allow 
voters to choose governments: foe 
profusion of parties nrast do that af- 
ter an election. He Christian 
Democrats flirted with foe idea of 
making the electoral system an is- 
sue by tentatively proposing 
c h a ng es which would enable voters 
to choose their preferred coalition 
as well A wave of derision from the 
other parties swept foe idea back 
on to the shell 

The oddest paradox about cur- 
rent politics in Britain and Italy, is 
that electoral reform in both coun- 
tries is tilting at rather opposite ob- 
jectives. 

In Britain, there is a swell of 
opinion, re pr esented by the Iiberal- 
Sodal Democrat Alliance, in favour 
of a proportional representation 
system which would remove foe 
“unfair” distortions of ma- 
jorities. In Italy most of the reform- 
ers, who include 200 parliamentar- 
ians, would bring in stogie constitu- 
encies electing representatives on a 
majority basis. 

Those Italians most seriously 
gripped by the need for cfectoral re- 
form tend to favour foe French sys- 
tem, which eliminat es all but. foe 
two front nmners in the first round 
unless foe leading candidate hey an 
absolute majority. He UK model is 
thoug ht a little too crudely unre- 
presentative, although it wotdd car- 
ry the Italian reformers even closer 
to their objective of fewer parties 
and fewer changes of government 

Indeed, perhaps too dose for 
comfort, since one academic study 
of the 1979 Italian election con- 
chided that if it had taken place un- 
der the British system, only two 
and a bit parties f the South Tyrol 
Volkspartd) would have survived. 
The two would have been foe Christ 
tian Democrats and the Commun- 


ists, although one or two other par- 
ties might have won skeletal re- 
presentation if they had forged 
electoral alliances. - 

Fear that the Christian Demo- 
crats and Communists might even- 
tually impose a new electoral sys- 
tem in the interest of winnowing 
down the number of parties, is one 
reason why Bettiuo Graxi, the So- 
cialist Party leader, is leafing foe 
pack from foe squeezed centre with 
bloodcurdling warnings of a renais- 
sant “compromesso storico” be- 
tween these two numerically domi- 
nant parties. 

But it ought, perhaps, to occur to 
him and foe other party leaders 
that some voters may also be at- 
tracted and interested by informa- 
tion as to what the parties think the 
next Italian government ought to be 
doing to cope with a soaring budget 
deficit, rising unemployment, de- 
clining trading competitivity and a 
south of the country still receding 
into eocmomicbackwardbess. A few 
answers might even make an elec- 
tion campaign. 


THE LEX COLUMN 


Participation in 
the black hole 


like perpetual motion, foe prob- 
lem of conserving foe equity con- 
tent of bank balance sheets is a 
venerable chestnut that orthodox 
science has declared impossible to 


ffyir. The principle of nn ~ 

tropy declares that, other things be- 
ing equal, will tend to fritter 
away their equity as their loan 
books expand, as general provisions 
cool into specific, and reserve 
strengthening te succeeded by writ- 
ing off assets to absolute zero. 

Facing up to the hidden discount 
in its asset base is good for a banks 
sooL and can be good forth* share 
price, but only for those banks 
which have entyngh capital to ab- 
sorb the shock. And even, for them, 
the cannot be nmpfinrtff ty 

repeated unless the capital base is 
rebuilt, between purgations, out of 
retained earnings and raids on the 

t—pHal irmrVptq 

For a while it seemed passible to 
get by with Soma of near equity, 
such as perpetual floating rate 
notes. Bat even foe most generous 
criteria of capital adequacy, opened 
up by bank regulators to include 
these items in “primary capitaF, do 
not in foe end allow banks to stave 
off the moment when new equity is 
needed to repair foe damage 
wrought by unsound sovereign 
lending. Perpetual dotes having 
ground to a halt, the real thing -■ 
equity is foe mpre ..urgently 
needed. 

Tito trouble with equity, however, 
is that it is hardest to get when iiis 
most wanting. And foie dilution re- 
sulting from a significant issue cf 
ordinary shares is apt to weigh on 
foe share juice for years to came. 
What Is needed, for banks trading 
below book value, is a device for re- 
placing eroded capital with equity, 
white avetiding the normal dilution. 

Tn parts nf financial imreera* 
where the preservation of control 
has greatest weight, such devices 
have not infrequently been sighted. 
Before the current phase of dena- 
tionalisation, French hunlra wer e 

able to raise equity from the public, 
without ^educing f Mnm nwt con- 
trol by aeflmg-partldpating certifi- 
cates. In the early years the cen- 
tury, m Britain, it was for 

family-controlled companies to gear 
up the family base by selling partic- 
ipating preferred shares. 

Bringing this idea to bear on the 
banks might, just conceivably, dis- 
solve the problem. According to 
Guardian Corporate Finance, these 
participating pnrfs could be de- 



1982 


signed to have the same dividend 
entitlement as existing ordinary — 
making them attractive to equity in- 
vestors - but to have no claim on 
any other part of the earnings. 
Rum foe ordinary shareholders’ 
standpoint (and maybe that of the 
regulators) they would thus have 
foe advantage of debt, that growth 
in the asset base woald accrue ex- 
dusivety to the ordinary sharehold- 
ers. 

If it all sounds too good to be true, 
that may be unjust but it is not 
wholly surprising. Such devices 
need to be equipped with a variety 
of safety mechanisms; the rights of 
tin preferred shareholders have to 
be restricted in order to reserve foe 
bulk of earnings and assets far the 
ordinary, white the ordinary share- 
holders cannot have ah unfettered 
right to liquidate the company and 
take out any surplus. And then 
titore is tito distribution of value be- 
tween ordinary and participating 
shares. Only experience, and effi- 
cient arbitrage, can determine bow 

boating of the ordinary shares 
could command: without experi- 
mental evidence, it will be hard to 
dispel a sense of gravity overcome 
by mirrors. 


Aiiports 

Assuming a happy for 

the Cons ervativ e party on June li, 
tire next departure tn tito privatisa- 
tion schedule will be boarding 
shortly afterwards. Such is the way 
of these things now, that British 


jty of such as British Airways. Pri- 
vate investors have yet to see more 
foe preliminary TV ads, but 
wifi no doubt expect to * 

quick turn in a stock which. unhk* 
BA and Rolls Royce has the wider 
share ownership stamp of Jjn>mL 

All this ignores the fact that BAA 
is likely to turn out to be a pretty 
dull investment long term. Profits 
growth has not been staggering - 
11.8 per cent compound over the 
last five years on a historic cost ba- 
sis - and will probably continue to 
underp erform foe market. But 
whereas BA’s profits have been 
badly hit by the LibyaOwniobyl 
combination BAA’s year to end 
Maroh 1987 will show a return simi- 
lar to the previous year’s . 

At its simplest, BAA s business is 
about squeezing as many passen- 
gers as it can through the termi- 
nals, and sending as many planes 
down the runway as possible with- 
out them running into each other. 
There is a limit to foe crowding in 
terminals that passengers will bear 
- as Gatwick’s users are beginning 
to discover. Overcrowded passen- 
gers behave like battery hens 
which are too busy pecking each 
other to eat, duty-free soles fall if 
the queues are so long that people 
fear their flight. But run- 

ning an airport as dose as possible 
to capacity is the most profitable 
way. 

The great skill with airports, 
therefore, is to forecast demand 
years ahead in order to build and 
juggle both terminal and runway 
capacity to match. Because airline 
passenger numbers have been and 
ought to continue growing at a few 
percentage points a year, BAA 
needs to keep opening new facili- 
ties. This inevitably requires large- 
scale capital which should be little 
problem to BAA with its minimal 
gwaring and strong cash flow, even 
when it starts paying dividends. 
But it is likely to hold bwk margins 
in tito years when major new capac- . 
ity comes on stream. 

BAA must also work within tight 
regulation on pricing, facing up to a 
Monopolies and Mergers Commis- 


to find a receptive market Institu- 
tions are already getting excited at 
the prospect of -as it is bedng billed 
- an investment in the growing air- 
line market without the wDdvdatil- 


skm grilling every five years. While 
this is generally seen to be a disad- 
vantage, it does hove the merit of 
encouraging efficiency. And the 
MMC is not all bad: if the EC does 
one day abolish duty-free sales in- 
side the community, acceptance of 
foe “single tilT principle should per- 
mit BAA a compensating increase 
in the landing charges. 



ELECT FOR HOME 

AND WATCH YOUR MONEY GRO 


Hie British economy is booming 
Incomes and industrial output are- 


corporate profits for 1987 look set to 
outgrow both USA and Japan. 


Now is the time to invest 

This strong economic per- 
formance is reflected on the stock 
market Even in the short time since 
1st January, the FT. All-Share Index has 
climbed a further 29.6%. With interest 


secondary importance. The 
investment portfolio contains a 
spread of quality equities that will 
benefit from a strong economy while 
also offering good downside 
protection. We fully expect the fond, 
to continue to provide consistent 
capital growth. However the price of 
units and the income from them can 
of course go down as well as up. 


rates down by J/ 2 % and further cuts 
anticipated, the bull market looks set 


to continue. 


Grofund UK EquityThist 

Our UK Equity Tmst aims for all- 
out. capital growth, income is erf 


For further information 

- 000,1 delay. Telephone us or fill 

m the coupon and send it to us The 
minimum investment is £500 unless 
you decide to make monthly 

rantributkans, where the minimum is 

£20 per month. 


GROFUND 



yKEQU]JYTOUST_ 

1 rp r nJ&^“ s .^“ ! . FR EETOST. 


LIVING UP TO OUR NAME 

A MEMBER OF THE UNIT TRUST ASSOCIATION 


1 


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E«AurtnmariLoiidonEav2Na5Stm5M SJn , j 


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